Could The Collapse Of China’s Biggest Property Developer Lead To Another GFC?
Chinese property developer, Evergrande, used to be the biggest in the country and now it’s become the poster child of the bust.
The firm received a liquidation order from a Hong Kong court on Monday, two years after officially defaulting on public debt.
Evergrande’s collapse is the largest in a crisis that has dragged down China’s economic growth and led to a record number of defaults by developers.
Economist Richard Holden told The Briefing how the firm became the largest falling domino and what the implications are for the Australian economy.
Evergrande was the largest property developer in China, building mainly residential apartments. “At its peak, it was not necessarily building, but it was sort of taking deposits on over one hundred billion US dollars a year worth of properties,” Holden said.
“It appears that Evergrande was taking deposits on projects that weren’t even started and really acting like a bank that was speculating a great deal,” he said, “That could have a really bad effect on the poor folks who put their money into that.”
To hear more about Evergrande’s downfall and what it means for the Australian economy, listen to the latest episode of The Briefing.
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