It is alleged that Hui Ka Yan, a former Chinese businessman, is still monitoring the situation in China Evergrande Group last week when government officials took a majority of seats in a new risk management committee set up by the creditor.
In a statement issued Monday night after Evergrande’s stock market crash in Hong Kong, Hui said the new committee would not report to the board “but would play a key role in reducing and eliminating the group’s future risks”.
Although Hui is the chairman of the seven-member committee, the four seats are made up of representatives of state-run government agencies or governments in the southern state of Guangdong. Evergrande is located in Shenzhen, a state-of-the-art manufacturing facility and border service with Hong Kong.
Liu Zhihong, head of Guangdong Holdings, a Guangdong provincial government-elected body, was elected chairman of the committee. According to two people involved in the Evergrande reform, the Guangdong government has taken over the Evergrande position among other things because Shenzhen officials are embroiled in the same crisis. See them, property and financial management team.
The Chinese government has also taken over the power of other debt-ridden businesses through similar means – especially HNA, an airline, travel and tourism industry south of Hainan province that has been well-received by local authorities. early last year.
But nothing has been as great as Evergrande, whose total debt exceeds $ 300bn, or linked to China’s economy. Debt settlement and reducing the collateral damage to the entire property will be a major challenge.
“The working group will take Evergrande and find other people, especially civil servants, to take up development projects,” said Chen Long in Plenum, a Beijing consultant. “After that Evergrande is over. Enima initial shares including Hui Ka Yan have been deregistered.
“This is how Beijing has helped the most debt-ridden companies over the last three or four years,” Chen said. “There were several times they would have saved Evergrande. They could still have saved Evergrande today. But there is nothing politically motivated to do that.”
HNA was one of four “white rhinos” – a term used to describe the most advanced groups believed by the authorities to be at risk of economic instability in the country – which the Chinese government retaliated in 2017 after the regime affected their economic growth. foreign purchases. HNA and another rhinoceros, Anbang Insurance, were all at the head of a government-led reform that was so long and unpredictable that it eventually disappeared unnoticed without triggering market fears.
Evergrande’s remarks on Monday night suggest that government officials on their new risk management committee should also look into this. “[Evergrande] he believes that the experience of the committee members, as well as the resources they can use, will help the team deal with the challenges they are currently facing, “said the developer.
Neither HNA nor Anbang had as much history or share in the Chinese economy as Evergrande does. It is the second largest trading post in the world, with the economy expected to account for one third of the world’s economy.
This explains the careful adjustment that has been made around Evergrande’s slow death last week.
When markets closed on Friday, Evergrande revealed that it would be difficult to return the previously unrecognized $ 260m guarantee. Such assurances are the only way the collapse of the movement could bring chaos to China’s economy. Evergrande stated in its August report that it had issued Rmb557bn guarantees ($ 87.4bn) on behalf of real estate buyers and businesses.
China’s central bank, security regulator and bank regulators all issued a statement Friday saying the manufacturer’s difficulties stem from management errors and that the crisis could not affect the financial system. On Monday night, the Politburo of China’s Communist Party said it would take action “to strengthen people’s homes and support the housing market”.
This helped lower market tensions even though Evergrande bond holders said they had not received a late repayment of $ 82.5m, indicating a lack of trust that the group has avoided three times in recent months.
The total loan amount was $ 343m – the same amount Hui earned by selling nine shares of its sharehold in Evergrande at the end of last month. But neither he nor Evergrande has said whether the money could be used to pay off international debtors or home lenders, including thousands of retailers and sellers who are worried the authorities will explode. common protests.
Eswar Prasad, a Chinese economist at Cornell University, said the Politburo’s statement and the central bank’s efforts to improve banking performance reflected Beijing’s goal of “helping to grow but not to increase debt that could lead to economic recovery.” Market inequality “.
Zhiwei Zhang, an economist at Pinpoint Asset Management, added that “a message from the Politburo was important, indicating that the government can release regional policies.” But even then, it could be too late for Evergrande to stop because of his debts.
Additional reports of Xinning Liu in Beijing
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