China’s fallen property tycoons race against time to fix US$232 billion debt (2024)

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China’s fallen property tycoons race against time to fix US$232 billion debt? ›

China's fallen property tycoons race against time to fix US$232 billion debt. Chinese companies defaulted on US$54 billion of offshore debt in 2022, or a record 6.2 per cent of outstanding volume, versus US$10 billion in 2020 and US$4 billion in 2015, according to S&P Global Ratings.

Evergrande, the world's most indebted property developer with $300 billion of total liabilities, has been at the centre of a debt crisis that has seen multiple Chinese developers default over the past year and seek to restructure debt.

Evergrande Group announces long-awaited debt restructuring deal after 2021 collapse. China's Evergrande Group, whose collapse in 2021 sparked China's worst property market crisis on record, has unveiled a multi-billion dollar restructuring plan to make peace with its international creditors.

Evergrande Group owns 565 million square meters (6,080 million square feet) of development land and real estate projects in 22 cities, including Guangzhou, Tianjin, Shenyang, Wuhan, Kunming, Chengdu, Chongqing, Nanjing, Zhengzhou, Luoyang, Changsha, Nanning, Xian, Taiyuan and Guiyang in Mainland China.

China Property Crisis Puts $1.6 Trillion of LGFV Debt at Risk - Bloomberg.

An Associated Press analysis of a dozen countries most indebted to China — including Pakistan, Kenya, Zambia, Laos and Mongolia — found paying back that debt is consuming an ever-greater amount of the tax revenue needed to keep schools open, provide electricity and pay for food and fuel.

China's $23 Trillion Local Debt Crisis Threatens Xi's Economy - Bloomberg.

Evergrande halts trading of its stock and subsidiaries, raising expectations of an overhaul in the world's most indebted developer | South China Morning Post.

Overall, the U.S real estate market won't likely be impacted in a significant way due to Evergrande.

Will Evergrande affect the world? ›

A slowdown in the Chinese real estate sector, which accounts for a significant proportion of the country's economic output, could have ripple effects on global growth. Evergrande's woes have rocked stock markets -- and the real estate sector makes up much of distressed dollar-denominated debt internationally.

But China's housing market began to slow as regulators cracked down on excessive borrowing. Further funding problems sent the company's stock and bonds tumbling and, after late payments on some dollar bonds, it missed a December 2021 deadline to pay two dollar-bond coupons. 2.

In play now in China, where around 70% of household wealth is in property, this phenomenon is weighing on the post-pandemic recovery of household consumption, which Chinese policymakers have vowed to make a more prominent driver of economic growth.

The direct impacts of a Chinese crisis in terms of losses incurred by foreign holders of Chinese loans or securities would therefore be limited. China's gross foreign debt was officially estimated at around $2,635 billion (USD), or 15.5% of GDP at the end of 2021.

The housing market was hit severely by the measures, and in September 2021, prices stagnated or even declined in the 70 cities tracked by the government. Difficulties in the housing sector continued into 2022, when total sales decreased by 24.3% from 2021 and investment by real estate developers dropped by 10%.

With $1.1 trillion in Treasury holdings, Japan is the largest foreign holder of U.S. debt. Japan surpassed China as the top holder in 2019 as China shed over $250 billion, or 30% of its holdings in four years. This bond offloading by China is the one way the country can manage the yuan's exchange rate.

Many people believe that much of the U.S. national debt is owed to foreign countries like China and Japan, but the truth is that most of it is owed to Social Security and pension funds right here in the U.S. This means that U.S. citizens own most of the national debt.

As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

Sep 22 2021

According to reports, major U.S. investment companies and other funds, including BlackRock, UBS, HSBC and Ashmore Group, held more than $1.3 billion of Evergrande's international bonds.

Who is the owner family of Evergrande? ›

Norway is the country with the highest level of household debt based on OECD data followed by Denmark and the Netherlands.

Learning about Countries and Their Debt

The best example can be taken from Hong Kong (it is a one of the debt free countries), whose economy has the least debt to GDP ratio. It is an almost debt free country. It has a well-regulated financial system and large foreign reserves.

It's still possible the Chinese government may offer a bailout to Evergrande, but there is considerable uncertainty among regulators about how to handle the company. Protesters have already gathered near the Evergrande offices demanding the government compensate investors and apartment owners.

Crisis-hit Chinese real estate giant Evergrande has suspended trade in its shares in Hong Kong as investors await news on its restructuring plan.

Future price of the stock is predicted at 1.020707415981$ (255076.854% ) after a year according to our prediction system.

With more than $300 billion in total liabilities including offshore debt, Evergrande has been at the centre of a property debt crisis in which multiple Chinese developers defaulted over the past year.

As of 2020, China's total government debt stands at approximately ¥ RMB 46 trillion (US$ 7.0 trillion), equivalent to about 45% of GDP.

As recently as 2020, total debt in the United States relative to GDP exceeded China's. But as of mid-2022, China's relative debt burden stood 40 percent higher than America's.

Is China under huge debt? ›

China's debt is nearly 44% of its GDP and its local governments owe nearly $5.14 trillion.

London-based emerging-markets giant Ashmore Group remains one of the largest holders of Evergrande bonds, with $146 million held across several portfolios (based on portfolio data collected by Morningstar from June to August 2021).

The company said earlier this month that members of an ad hoc group of investors signed agreements in support of the restructuring. As of the end of 2021, Evergrande had $140.7 billion of offshore debt.

U.S. debt to China comes in the form of U.S. Treasuries, largely due to their safety and stability. Although there are worries about China selling off U.S. debt, which would hamper economic growth, doing so in large amounts poses risks for China as well, making it unlikely to happen.

If China stops buying or elects to sell even a small portion of its position, U.S. Treasury prices would fall, and yields would rise. The result of higher rates, in turn, would likely be slower economic growth and higher borrowing costs for the U.S. government.

With $1.1 trillion in Treasury holdings, Japan is the largest foreign holder of U.S. debt. Japan surpassed China as the top holder in 2019 as China shed over $250 billion, or 30% of its holdings in four years. This bond offloading by China is the one way the country can manage the yuan's exchange rate.

If China called in all of its U.S. holdings, the U.S. dollar would depreciate, whereas the yuan would appreciate, making Chinese goods more expensive.

The national debt of Russia was forecast to increase between 2023 and 2028 by in total 36.3 billion U.S. dollars (+7.71 percent). This overall increase does not happen continuously, notably not in 2027 and 2028. The national debt is estimated to amount to 507.15 billion U.S. dollars in 2028.

In terms of raw dollars, the country with the highest debt in the world is unquestionably the United States, whose national debt is more than twice that of any other country.