[EpochTimesJuly092021](Epoch Times reporter Zhang Yujie comprehensive report) Xu Jiayin, the founder of China Evergrande Group, appeared on the Tiananmen Gate on July 1st on the day of the Chinese Communist Party’s “100th Anniversary of the Party.” However, foreign media revealed that Xu Jiayin had just been interviewed by the Chinese Communist Party, mainly for his US$302 billion debt issue.
Bloomberg News quoted sources from insiders on July 9 that Xu Jiayin was interviewed by the Chinese Communist Party’s regulators at the end of June and asked to consider introducing strategic investors to help resolve Evergrande’s debt problems, so as not to have a major impact on the Chinese economy.
Another anonymous insider said that Xu Jiayin replied to officials that he was looking for a solution.
Was “interviewed” twice before and was asked to speed up the sale of assets
According to sources, in May, the Central Bank of the Communist Party of China and other regulatory authorities asked Xu Jiayin to speed up the sale of assets and repay debts; after that, officials from the Financial Stability and Development Commission of the Communist Party of China met with Xu Jiayin and asked him to resolve the company’s debt problem as soon as possible.
About ten months ago, in September 2020, Evergrande Group denied the rumors of restructuring with Chinese state-owned enterprises. At that time, it was widely rumored that Evergrande Group sent a letter to the Guangdong Provincial Government, hoping that local officials would support its reorganization of assets with the Shenzhen Special Economic Zone Real Estate Group (Shenzhen Real Estate Group). Subsequently, Evergrande Group stated that the letter was forged.
Although Xu Jiayin’s ascent of Tiananmen Gate once made investors think whether there was a solution to his debt problem, so far, the Chinese Communist Party has not stated whether to provide funds for Evergrande Group, which has caused investors to speculate.
The debt problem caused the stock price of Evergrande Group to continue to fall. This year, it has fallen by more than 36% to the lowest point in the past four years. After the news that Xu Jiayin was interviewed on July 9th, Evergrande’s stock price fell another 1.56%.
Evergrande has drastically cut prices to sell houses and sell assets
The Wall Street Journal reported at the end of June that Evergrande recently announced the sale of nearly US$1 billion of shares in two companies, namely the Internet service company Hengteng Network Group Co., Ltd. (Hengteng Network) and the real estate company. Developer Jiakaicheng Group Co., Ltd. (Kakaicheng).
In the second half of 2020, Evergrande sold houses at a price cut, from a 15% discount to 20%, 25%, and 30%. At the end of the same year, Evergrande once reached 60%. In 2020, Evergrande’s profit will be more than 30 billion yuan.
Xu Jiayin was once elected as China’s richest man. In February this year, on the Hurun Global Rich List, Xu Jiayin ranked fourth among the richest in China.
However, mainland real estate companies, including Evergrande Group, are facing financing difficulties. The authorities implemented the “three red lines” of real estate financing restrictions in August 2020. They are: the asset-liability ratio of real estate companies after excluding advance receipts should not be greater than 70%; the net debt ratio of real estate companies should not be greater than 100%; “Cash short-term debt ratio” is less than 1.
In mid-June, Bloomberg quoted the analysis of Professor Lan Deng, a professor at the University of Michigan who studies US-China real estate, saying that if Evergrande encounters trouble, it will obviously have a significant impact on the Chinese real estate market and the overall economy. Deeply connected, lenders and borrowers will face greater financial risks, which may have knock-on effects in different sectors.
Editor in charge: Zhou Yiqian#
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