Chinese real estate company Evergrande has until January 29 to draw up a rescue plan to avoid bankruptcy. A judge in Hong Kong decided this on Monday, according to international news agencies, on the day that Evergrande should have come up with a conclusive plan. Evergrande will continue discussions with investors to get its finances in order. According to the judge, Evergrande must “consult more directly with the relevant authorities” and it is “not just about the creditors in court.”
Evergrande began to falter in late 2021 as the Chinese government tightened its supervision of the housing sector to curb the rise in house prices. It turned out that the company had 276 billion euros in open accounts outstanding. The entire Chinese real estate sector, which makes up about 20 percent of the national economy, was at risk. The global economy held its breath, and Evergrande’s fall has still not been broken.
Evergrande is so large and important to the economy that a bankruptcy is almost unbearable for the Chinese government, also because many Chinese families have already made down payments for homes that Evergrande has yet to build. On the other hand, the government has been relatively cautious: there is not (yet) a major rescue plan such as the American government drew up for its banking sector in 2008.
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