Country Garden, China’s largest property developer with four times as many projects underway as embattled Evergrande, faces its moment of reckoning this week.
China’s largest property developer, Country Garden, has been missing interest payments on its debts and onlyon them. The moment of reckoning, or at least one of those moments, arises this week.
With $US187 billion of total liabilities, including about $US11 billion of offshore bonds, Country Garden is carrying nowhere near as much debt as, which has about $US335 billion of liabilities. But Country Garden has about four times as many projects under development. It is by far China’s biggest developer.
China’s authorities, who triggered the crisis by imposing Xi Jinping’s “three red lines” policy, which set hard limits on developers’ leverage, have done what they can to help them now by loosening credit criteria and lowering mortgage interest rates to try to boost demand for property.
It is unlikely that the authorities will countenance anything but an orderly winding down of developers like Evergrande and Country Garden, hoping that time will help reduce the impact of their failures. With the economy flirting with stagnation – last month’s consumer price inflation reading was zero and producers’ price inflation was minus 2.5 per cent – the People’s Bank of China has been injecting cash and liquidity into the financial system. There are also reports that Beijing is considering widening its planned 3 per cent budget deficit with borrowings to fund a significant new infrastructure investment program.
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