According to the Wall Street Journal report,Evergreen,country garden“Thunderstorm” is just the beginning, a big beginningreal estateThis crisis is threatening the Chinese economy and could become China’s most serious crisis to date.
Country Garden’s financial difficulties could pose an even bigger problem for China’s economy and policymakers in 2021 than Evergrande’s debt default, the report quoted experts as saying.
However, the China Financial News Agency reported on the 19th that Country Garden’s “16 Tangyu 02” bond expansion plan has been approved by vote, which means that all nine domestic bonds planned to be expanded by Country Garden have been successfully issued. have been increased.
The Wall Street Journal noted that Country Garden’s business is mainly concentrated in China’s remote cities and industrial areas. These areas were once important engines of China’s economic growth during the boom, but they now face tight government finances and a rapid exodus of residents, making them less able to absorb the severe impact of the collapse of a major developer. went.
The report predicts that problems in China’s real estate industry will once again hit consumer confidence and prolong the long-running real estate recession, while real estate and related industries account for nearly one percent of China’s GDP. There are fourth parts.
Kenneth Rogoff, an economics professor at Harvard University, believes that China’s “entire (real estate) industry is in crisis.” He said these problems are especially acute in small and medium-sized cities. Years of overconstruction have led to an oversupply of housing, and China’s real estate market needs to adjust. How to stop Chinese people from panicking? “This will not be easy as most of their assets could be significantly devalued as a result,” he said.
As Country Garden has continued to focus on expansion in China’s non-first-tier cities for many years, it has particularly benefited from China’s urban renewal plan implemented in lower-tier cities since 2015. The scheme provides new homes to eligible residents or provides cash to purchase homes.
Country Garden markets properties in rural areas to sell to residents living in larger cities where costs are higher. Country Garden has four large-scale residential developments in Shaoguan, a fourth-tier industrial city in southern China’s Guangdong province with a population of about 3.4 million, which was ranked among the company’s top 100 projects in China last year.
Given this, provincial and municipal governments, which used to generate most of their revenue from land sales to country gardens and other private developers, have also felt tremendous pressure. In many of China’s second, third, and fourth-tier cities where the economy is more backward, residents’ incomes are low and unstable, and local government budgets and finances are also tight.
Earlier, analysts at Barclays in the United Kingdom issued a report saying that Country Gardens is “synonymous with the story of China’s mass-market real estate and urbanization.” And Country Garden’s debt is not as big as Evergrande’s. It was generally expected that Country Garden would survive the real estate downturn… However, Country Garden encountered difficulties repaying its debt in August, which “shaked what little market confidence was left.”
Yao Yu, founder of Chinese credit research firm YY Ratings, said that even if Country Garden managed to avoid default, it would have to significantly reduce its size. He believes that a further decline in sales is inevitable and that “the era of China’s giant private developers is over.”
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