[NTD News September 18, 2021, Beijing time]The debt crisis of the Chinese real estate giant Evergrande Group continues to ferment, but the CCP government has been slow to act and has an ambiguous attitude. Party media “Global Times” editor-in-chief Hu Xijin also issued a document a few days ago, asking Evergrande to “self-help” and claiming that Evergrande’s bankruptcy “will not trigger a financial turmoil.” Netizens criticized Hu Xijin for shirking responsibility for the government.
On September 16, Hu Xijin posted on Weibo that the reason for Evergrande’s crisis was “blind expansion, reckless manipulation of finance, and the use of high leverage”. The government will not “deliberately put the enterprise in trouble”, nor “because of Some companies have serious problems and they are deliberately accommodating and protecting them.” Companies in the event of an accident cannot have the fluke of being “too big to fail” and must have the ability to “rescue themselves in a market way”.
Hu Xijin also claimed that he did not think that the bankruptcy of Evergrande would become the “fuse of a systemic financial turmoil like the collapse of Lehman Brothers” because “there is no basic situation in China where a subprime mortgage crisis occurs in real estate.”
Regarding Hu’s argument, many Chinese netizens criticized Hu Xi for helping the government to throw away the pot. Everything is pushed to the heads of businessmen,” “I think of the market economy at this time”, “High leverage is not caused by policy”, “The state is not saved, and the people will bear it.”
The outside world believes that Hu Xijin has always been known as a “pick-up man” who “fudges the best”. Although he often “makes the wrong game”, he also regards his remarks as a reference for observing official dynamics.
Evergrande’s debt crisis has continued for many days, and investors from all over the world have surrounded Evergrande’s offices or took to the streets. However, it seems that the government has not launched a forceful suppression of the previous mass incidents, and relevant public opinion has not been blocked, and even local official media have launched a public opinion encirclement and suppression of Evergrande. Although there have been successive analyses by experts at home and abroad that Evergrande is “too big to fail”, the official has not taken any action to save the field.
According to Bloomberg News, Evergrande’s rescue from the Guangdong Provincial Government did not receive a response, and the authorities suspected signs of preparing for Evergrande’s debt restructuring.
The hidden danger of China’s real estate bubble is growing. The CCP issued the “three red lines” of real estate debt last year, which plunged many real estate companies such as Evergrande into a debt crisis. The Central News Agency quoted an analysis as saying that the authorities may not hesitate to hit the “seven punches” that hurt the enemy and themselves, but also reduce their leverage to avoid “systemic financial risks.”
Dr. Xie Tian, a professor at the Aiken School of Business at the University of South Carolina in the United States, believes that in the face of Evergrande’s crisis, the CCP authorities are in a dilemma and they don’t know what to do. If Evergrande is allowed to go bankrupt, it may cause the entire real estate industry to collapse; if it is to be rescued, there are still many real estate developers like Evergrande, and they cannot be saved.
Reuters reported that the total debt of China Evergrande Group exceeded US$300 billion, equivalent to 2% of China’s GDP. On the 17th, Evergrande’s drop in early trading expanded to more than 10%.
(Reporter Jing Zhongming Comprehensive Report/Editor in Charge: Xu Gengwen)
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