Evergrande, China’s Largest Construction Company, Files For Bankruptcy

Following the troubles experienced by Country Garden and Evergrande, new warning signals will not be long in coming.

China’s Evergrande, the world’s largest Chinese real estate developer, has become a symbol of the crisis that has hit the Chinese construction industry. After a failed series of attempts to stay afloat, the Chinese construction group filed for bankruptcy on Saturday and requested creditor protection in the Manhattan District Court of New York.
As expected, Evergrande invoked Chapter 15 of the US Bankruptcy Code, which “protects non-US companies in the process of restructuring.” If Evergrande’s request is satisfied, the company will be protected from creditors that hope to sue it or freeze its corporate assets in the United States.
The real estate crisis in China is growing like an oil patch. In the first half of 2023, the volume of real estate that was seized and put up for auction in China increased by almost 20%. This dangerous trend follows the deterioration of China’s economy in the post-covid phase and also reflects growing difficulties with mortgage payments.
The figures cannot but cause concern. According to real estate research institute China Index Academy, “304,000 properties have been sold in the past six months, including 179,000 homes.” It was stressed that this trend primarily reflects the inability of Chinese owners to repay their mortgages.
The situation in Central China is the worst of all. For example, in Henan province, property seizures rose by more than 63%. It is followed by the Chinese province of Sichuan in the southwest of the country with a 51% increase and two other provinces – Guangdong and Jiangsu.
The crisis affected not only “people’s” housing, but also luxury real estate: some villas in Shenzhen were seized from the owners and sold for more than $15 million.