[Epoch Times December 06, 2021](Epoch Times reporter Yi Ru interviewed and reported) After China Evergrande Group issued the “Failure to Fulfill Financial Guarantee Responsibility” announcement, the Guangdong Provincial Government immediately interviewed the founder of Evergrande Xu Jiayin and dispatched it Working group: The CCP’s party and two sessions emphasized in unison that the Evergrande issue is a case risk. Experts said that the official rhetoric was to stabilize the real estate and financial markets, but in actual operation, the official has already intervened in the Evergrande issue.
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On December 3, China Evergrande Group issued an announcement on the Hong Kong Stock Exchange that it could not perform its guarantee obligations amounting to US$260 million, which may cause creditors to demand accelerated debt maturity. Caixin said that this means that Evergrande’s $19.236 billion undue USD debt cross default has been initiated.
Evergrande Group currently has a total debt of approximately RMB 2 trillion, including US$19.236 billion in outstanding U.S. dollar debt. According to the Securities Times, Evergrande’s private equity debt with a total amount of US$260 million is mainly an overseas funder. This is the first default of overseas debt.
At about 9 o’clock that night, the Guangdong Provincial Government where Evergrande is located immediately interviewed Xu Jiayin, the actual controller of Evergrande, and said that at the request of Evergrande, it agreed to send a working group to Evergrande to supervise the risk management of the enterprise and maintain normal operations. One party and two meetings rarely expressed their opinions overnight, explaining the reasons for Evergrande’s troubles and the subsequent related impacts.
Ren Zhongdao, a researcher at Tianjun Finance, an independent think tank, told The Epoch Times on the 4th that the statement of the two parties is to maintain the stability of the financial system. “Hengda is likely to start a large-scale debt default.” An urgent interview with Xu Jiayin and a working group was sent in. , “This means that the situation has deteriorated.”
And the central economic meeting will be held in the next two weeks. This time point is also consistent. It is necessary to release the so-called positive signal to the market. “Li Keqiang also said today that the RRR will be lowered. In the future, the currency will still be loosened, so that the stability of the financial system is the number one priority. Important task.”
Taiwanese financial expert Huang Shicong told The Epoch Times on the 4th that relevant units have come out to express their views that the Evergrande incident will come to an end. “The purpose of course is to stabilize the current real estate situation, and even stabilize the current situation of China’s financial market.”
Of course, whether stability can be achieved depends on how big the effect of the subsequent Evergrande collapse is. “Currently, we are doing some risk control.” Huang Shicong said.
The Evergrande problem is not a case risk
The central bank stated that Evergrande’s risks are mainly due to its own poor management and blind expansion. The China Banking and Insurance Regulatory Commission expressed its concern about Evergrande’s failure to fulfill its guarantee obligation for an overseas bond. This is a case in the market economy. The China Securities Regulatory Commission believes that Evergrande’s poor management and blind diversification will eventually lead to an outbreak of risk, which is a case-by-case risk.
Ren Zhongdao said that Evergrande’s problems are institutional problems caused by the CCP’s policy promotion, “including the previous statement that real estate was listed as the pillar of the economy in the government work report. Relying on financial land sales to make money is their biggest source of income. Developers and the government are closely related.”
It is inappropriate to want to cut the seats and cut the seats. “The CCP has to bear most of the responsibility. After all, the seven floors of a house price are taken away by the government.”
Li Zongguang, chief economist of China Renaissance Capital Group, told the media that “high leverage-high turnover” is the mainstream model of real estate development. At present, the list of real estate companies that have been disclosed by Thunderstorm is increasing, including Shanghai Greenland, Baoneng, Sunac, R&F, Zhengshang, Sunshine City and so on.
Huang Shicong said that if the CCP does not classify the Evergrande incident as a single incident in its risk control management, but recognizes it as a market-based overall risk, “for many people’s confidence, or the outside world’s perception of the housing market, it will be a negative one. Expected effect.”
This statement is an expression to prevent further deterioration of the situation. “In fact, this is not a case. Except for Evergrande, including the carnival of Zeng Baobao and Kaisa, many problems may continue to occur. In fact, this It’s a little bit overwhelming (argument).” He said.
In order to control risks, the Chinese Communist Party has already deployed
Caixin.com reported that, before the regulatory authorities have issued a unified plan for Evergrande’s risk management, relevant departments of the provincial and municipal governments have begun to take actions during actual operations.
Guangdong Province, the registered place of Evergrande, has already begun to figure out the situation, requiring Evergrande to submit a list of the construction projects in the Evergrande Group nationwide and the list of construction workers for the projects under construction and their contact information; including the sales and delivery within the Evergrande Group but have been delivered. Buyers who have not applied for a real estate certificate and other materials, and require Evergrande to submit before the afternoon of September 27.
The Ministry of Housing and Urban-Rural Development also issued notices to the Provincial Housing and Urban-Rural Development Bureaus and local Housing and Urban-Rural Development Bureaus, requesting the collection of relevant information on Evergrande’s nationally suspended and semi-stopped projects, especially the amount of funds allocated by Evergrande’s headquarters for such projects and the completion of follow-up projects. The required funds are required to be submitted on September 24.
Ren Zhongdao said that the authorities will take the next step in handling Evergrande’s offshore bonds. At present, the domestic part will be stabilized. “There are rumors that the Xi Jinping authorities are going to split Evergrande. Evergrande has about 200 projects in various places. Involved in many cities, the local government began to slowly take over, and then find other developers to take his project next, and at the same time began to supervise its funds, can not be used at will, the goal is to minimize the impact and avoid A mass incident occurred.”
Since the beginning of this year, Evergrande has been continuously defending the rights of various creditors including suppliers, financial institutions, home buyers, and wealth management customers. On December 2, a video circulated on the Internet: The owner of Evergrande in Langzhong City, Nanchong City, Sichuan defended their rights at the gate of Langzhong City Government. In the video, the owner said: The owner bought a hard-covered house. Because Evergrande’s capital chain was broken, the government asked the old owner to accept the unfinished house for self-renovation. The owner asked Evergrande to resume work, disputed with the police, and the owner was taken away.
The reporter is unable to verify the authenticity of the video content.
Huang Shicong said that based on political and economic stability considerations, the Chinese Communist Party will first solve the problems of Evergrande contract suppliers and home buyers.
“What it fears is that not only real estate companies will be affected. If Evergrande goes bankrupt, will many surrounding industries have another domino effect? Because usually all countries regard the real estate industry as a locomotive industry, this is what it wants Build a firewall and place Evergrande’s control on the real estate company itself, instead of spilling over to other industries.”
Therefore, “including the central and local governments have moved up, and they have been preventing the trouble caused by the collapse of Evergrande a few months ago.” Huang Shicong said.
Editor in charge: Li Muen#
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