The Chinese authorities today called on officials of the Evergrande group to demand that they “actively” resolve the company’s cash flow problems, the bankruptcy of which would have serious consequences for the Asian economy.
Evergrande, one of China’s largest private groups, employs 200,000 people and creates 3.8 million jobs in China.
Real estate is its main activity, and its founder Xu Jiayin is the fifth richest person in the country, according to the research arm of Hurun.
However, the group is heavily indebted after the increase in the number of acquisitions: 5.655 billion yuan (about 743 billion euros) in January 2021, the date of publication of the annual report.
Concerned about the solvency in the medium term, the financial rating agency Moody’s in early August downgraded the “rating” from “B2” to “Caa1”, one of the lowest. Fitch and Standard and Poor’s (S&P) did the same.
According to a statement from the central bank, the central bank and China’s banking and insurance regulator (CBIRC) urged the group to “actively address” the debt problem and “maintain the financial stability and stability of the real estate market.”
The group’s financial health is a concern in the markets, with contractors and suppliers complaining of late payments.
In addition to the real estate sector, the Evergrande Group also owns a football club: Guangzhou FC (formerly Guangzhou Evergrande) headquartered in Guangzhou.
The group also has a presence in the mineral water and food markets under the Evergrande Spring brand and invests in tourism, insurance, healthcare and electric vehicles.
The company announced last week that it was “in discussions” with investors to sell some of its assets.
