China’s real estate giants are faltering
Country Garden suspends trading of certain bonds
08/12/2023 9:58 p.m
The giant Chinese real estate developer Country Garden has been in financial difficulties for some time. This is fueling fears across the industry. The group is now stopping trading in part of its bonds.
The troubled Chinese real estate group Country Garden has stopped trading in some of its bonds. Country Garden’s 11 onshore bonds outstanding in the domestic market are to be suspended from trading indefinitely from Monday, according to the company’s published announcements on the Shenzhen Stock Exchange.
The impending difficulties of Country Garden, one of the largest private real estate developers in the country, have been fueling concerns that the industry crisis will worsen for some time. At the center of this is the real estate developer China Evergrande, which is struggling with its creditors to reduce its mountain of debt after suffering high losses. The former star of the Chinese housing market got into trouble after the real estate bubble burst.
Country Garden’s stocks and bonds sold off on Friday after the financial newspaper Yicai reported that the company was also preparing to restructure its debt. Country Garden, which specializes in real estate in smaller cities, was in debt at the equivalent of $194 billion at the turn of the year and has announced a loss of up to 55 billion yuan ($7.6 billion) for the first half of the year. In early August, Country Garden owed lenders interest on two-dollar bonds.
The bad news for China’s economy is currently piling up. China’s economic power is no longer suffering from the aftermath of the pandemic, the causes lie deeper. A key problem is that consumption is falling in China. This is particularly alarming for the Communist Party because it wants to change the economic model: away from export dependency towards domestic consumption.