On Wednesday (October 6), U.S. Secretary of State Antony Blinken, who was visiting Paris, accepted an interview with Bloomberg Television. When talking about the tension in the Taiwan Strait, he called on the Beijing authorities to stop the “provocative and destabilizing” actions against Taiwan, and Responsibly handle the Evergrande debt crisis.
Brinken said, “China (the Chinese Communist Party) must make its own economic decisions, but we also know that China’s economic actions will have a major impact and a major impact on the entire world, because all our economies are already at such a high level. Fusion.”
Brinken said, “Therefore, when it comes to matters that may have a significant impact on the Chinese economy, we expect China (the CCP) to take responsible actions and effectively respond to any challenges.”
Evergrande Group is a leading real estate company in China, with debts as high as US$305 billion (equivalent to RMB 1.97 trillion), including US$89 billion (equivalent to approximately RMB 582 billion) of interest-bearing debt, of which 42% will be in less than a year Expires within.
China Evergrande has recently interrupted its cash flow and failed to pay the maturity interest of many of its bonds, especially the interest of overseas US dollar bonds. The outside world has been controversial about whether Evergrande will evolve into the Chinese version of “Lehman Moment”. Since Evergrande involves hundreds of banks and financial institutions, thousands of upstream and downstream suppliers, and many overseas investors, once Hengda A major default or bankruptcy will have an impact and impact on the entire China and even the global finance and economy.
Brinken is the first official in the Biden administration to comment on the Evergrande debt crisis.
On the issue of how to deal with the debt crisis of Evergrande, the Chinese Communist Party has not officially stated its position so far.
According to the “Multidimensional” report on the CCP’s external propaganda website, the Evergrande crisis has triggered “anger” among the CCP’s top officials, who believe that Evergrande’s thunder has produced very negative social effects and requires accountability.
The source also said that Guo Shuqing, chairman of the Banking and Insurance Regulatory Commission of the Communist Party of China, went south to deal with Evergrande related matters in about mid-September.
According to the news, the Beijing authorities do not want a systemic crisis in Evergrande’s handling, so they will try to rescue the entire real estate industry, but will not directly rescue a company such as Evergrande.
On September 23, the Wall Street Journal quoted people familiar with the matter as reporting that the Chinese Communist Party has asked local governments to prepare for the Evergrande storm in China. The outside world believes that this shows that Beijing will not help the debt-ridden real estate developer.
According to people familiar with the matter, the local government has ordered accountants and legal experts to review the financial status of Evergrande’s operations in various regions, and negotiate with local state-owned and private real estate developers to prepare to undertake the affairs of Evergrande’s local real estate project, and at the same time establish a law enforcement team. To monitor public anger and so-called “mass incidents”, that is, mass protests.
On September 29, Evergrande stated that it had reached an agreement with a Chinese state-owned enterprise to sell its majority stake in Shengjing Bank for 10 billion yuan (about 1.5 billion US dollars).
However, an analyst from CreditSights, a research institute, believes in a report that the share sale will help China Evergrande resolve some of its upcoming liabilities, mainly due to Shengjing Bank, but it is not enough to fully resolve it. Evergrande’s liquidity problem.
Nevertheless, some analysts pointed out that this reveals the idea behind the CCP’s rescue of Evergrande, which is the so-called “who takes the child away.” It is reported that the Department of Housing and Urban-Rural Development in a province in eastern China has set up a “Hengda Group Project Disposal and Risk Resolution Special Class” to comprehensively check the debt gap of Evergrande in the province.
The Evergrande debt crisis has worried overseas investors that their investments will lose their money.
Bloomberg reported on October 7 that according to insiders, holders of US dollar bonds guaranteed by China Evergrande Group and one of its subsidiaries did not receive repayment when the bonds matured.
According to the report, Jumbo Fortune Enterprises is a joint venture whose owners include major domestic companies of Evergrande. The initial bond issued by it is US$260 million.
Bloomberg said that as of Thursday (October 7), some bondholders in Hong Kong have not received repayment due on October 3.
Bloomberg reported that failure to redeem the bond’s principal amount may constitute a default because the bond has no grace period, but if it is not paid due to administrative or technical errors, a five working day grace period is allowed.
Jing Sima, chief China investment strategist at BCA Research, pointed out in a report, “No matter how the debt is restructured, Evergrande shareholders and investors in offshore USD corporate bonds will suffer huge losses.”
Gordon Chang, a US expert on China issues, recently published an article in The Hill that China’s debt crisis will sooner or later drag down China’s economy, and the United States must decouple from China to reduce losses.
Cheng Xiaonong, a well-known economist in the United States, said that the media of various countries and the US financial media have begun to pay attention to the impact of the Evergrande storm. The Evergrande crisis not only caused the Hong Kong stock market to plummet as a whole, but also impacted the New York stock market. Not only Chinese concept stocks and Chinese bond funds were affected, but even U.S. companies were also affected.
Reuters analysis believes that Evergrande’s dollar bond investors will almost certainly not be able to recover their costs, while Wall Street’s loss of confidence in Evergrande continues to spread, and panic is also spreading in the Western financial world.