Evergrande and the China Property Bubble – Business and the Politics

Event Description

Evergrande has debts of over USD300 billion and is reportedly the most indebted property company in the world. Evergrande is struggling to repay debts, or to pay suppliers and contractors. Cash flow is a major problem as construction projects stall from the lack of payments. The situation not only raises cause for concern that Evergrande may collapse, but also that this will have a wider impact on the economy in China and even internationally. The problems for Evergrande seemed to become visible when the PRC Government introduced rules to restrict the borrowing costs of developers, which placed a cap on debt in relation to a firm’s cash flows, assets and capital levels.

This situation matters because of the scale of Evergrande, which is the second largest property developer in China. Evergrande has more than 1,300 real estate projects in over 280 cities, with a property services management arm involved in nearly 2,800 projects across more than 310 cities, and other business units engaged in a wide range of industries, including electric vehicles, health-care services, consumer products, video and television production units and even a theme park. In tital the company has over 200,000 employees. The scale of the company has raised the question of whether Evergrande is too big to fail and whether the PRC Government will intervene. This in turn raises questions regarding the confluence of business and politics in the PRC, and what this means for other large companies. Our panelists have decades of experience addressing such questions.

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