Evergrande, the 'runaway' developer that could become a wrecking ball for China's economy

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The saga of China's second-largest development firm has escalated from a financial crisis to a potentially criminal one with the investigation and detention of Evergrande chairman and founder, Hui Ka Yan.

Article originally published by The Guardian. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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05 Oct 2023

The company resumed trading on Tuesday after it was suspended last week in the wake of media reports of Hui’s apprehension. But analysts say signs point to a potential liquidation of the company, which could have drastic ramifications for China’s economy too.

“The Chinese government clearly intended its actions regarding Evergrande to be helpful to the real estate market, as it wants to stabilise it, not weaken it further,” said professor Steve Tsang, director of the Soas China Institute. “But the arrest of Hui almost certainly will make the situation worse for Evergrande and with this worse for the real estate market.”

Since regulations were tightened in 2020, companies responsible for about 40% of Chinese home sales have defaulted, and another major firm, Country Garden, has also battled to avoid missing massive debt repayments, raising