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- เผยแพร่เมื่อ 1 มิ.ย. 2024
- One of China's largest real estate developers has been ordered to liquidate by a court in Hong Kong. Evergrande is the world's most indebted developer, with more than 270 billion euros worth of liabilities. The order came after efforts to strike a deal with creditors failed. But the liquidation process could be complicated. Numerous authorities are involved and there are political considerations. Liquidation could have a major effect on China's economy and global markets.
00:00 Intro and report
02:19 DW's Phoebe Kong reports from Hong Kong
06:58 DW's Lars Halter reports from the studio
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#China #Evergrande #Debt
The funny thing is that China witnessed the bursting of Japan's bubble and said they would never be like Japan, and now they are following the same path as Japan did when their bubble burst.
Имеете в виду американский?
Not the same. China is even worst. They have corruption and 1.4 billions people to deal with.
The situation in China now is very different from that in Japan back then, and there is no comparison
You misspelled "U$A" ...2008
The difference is that China's bubble is way worse and is going to be way more painful.
Imagine taking out a loan on a home and that home is never going to be built but yet you still have to pay back the loan.
I don’t know how Chinese law works. In the US, these would be considered “construction loans”, which are very different than mortgages. Very high interest rates, with big strings attached. Banks wouldn’t make the kind of loans we see in China, knowing the risk. But the Chinese banks were encouraged to make these loans.
Common sense says this is not right. What sort of logic ends with that conclusion? Who would ever enter into an agreement like that?
Common sense agrees with you. But that is exactly the type of loan that was made. Essentially, the consumer was giving an unsecured loan to Evergrande, and using borrowed money to do it. This is how China was getting 6% GDP growth.@@richardkey1678
Money transferred to a company that goes bankrupt is usually gone forever. If the buyers just lost a deposit they are lucky. @@christianlibertarian5488
@@richardkey1678 In the news article they state that the government changed the regulations around borrowing that made it more difficult for them to pay the bills, which would have snowballed into cancelled contracts, and then no more buyers, then bankruptcy. It shouldn't have been so lax to begin with. But, governments all over the world do that kind of thing. For example, raising interest rates on existing debt, making it much harder for borrowers to pay back what they borrowed at a low interest rate. In the case of these guys, they should have completed one project so they could sell some homes and recover costs at least before they started the next one.
These numbers are really hard for me to understand. Absolutely staggering. Unfinished buildings that could house 1.4 billion people?!
Million
Narration mistake I think
😅
@@dylanzondag5224 What I said what subjective, you can't disagree with it.
And especially with a single line. Explain yourself or move on, troll.
@@kongthai.. oh really? Dang, that would make a little more since. Even thing, that seems a little low. I might have to look around for the original report. Thanks for planting the seed of doubt! 😁
For a while I’ve heard estimates of at least 100 million vacant units. Which is still quite a lot (could house the entire USA)
But those buildings might as well uninhabitable considering there’s so many TOFU-DREG constructions right there.
DW, as an American, your news is the best. Just unbiased reporting. Hard to get in the States!
Nope. I have watched their India reporting which is extremely biased
The obvious realities of Everbroke are finally admitted.
The MSM like CNN, DW are finally breaking their silence. Previously, only de-monetized, independent bloggers were sounding the alarm.
Source???? Ccp ordered evergrande to fold .
@@zacksmith5963 Not a question of order but reality. Had 10 time more debt than assets. Thus finally.
@@rempseaheinamies9414 source ? Proof ?
U don't know why evergrande went down did u ?
It was done by ccp . Ccp ordered end of speculative housing . Xi jin ping own words
" houses are for living not for speculation "
So people are covered. Only the directors get punished
I feel sorry for the citizens and workers, those who bought what they thought will be their future homes and those whose labor and work were used.
It is worse. Many invested in them not to live in but as a piggybank for old day money and such.
This is criminal! Their management knew projects would not be finished if they continued to start new ones also never intended to be finished in the next 20 years.
well, on the upside, the affordability of housing in China increased.
I imagine the management and bankers made money.
@akhusal that's all 😂😂
You've forgot one big .. player.
At least HK court appears to be independent and high integrity
Chinese 🇨🇳 property sector, which accounts for 30% of GDP, is crashing.
- Exports and imports, accounting for 37% GDP, are down.
- Foreign investment is falling over 90% compared to 2018.
- Foreign visitors are down 96% compared to 2019.
- Consumer prices are experiencing deflation.
- Youth unemployment hits over 21%, a record.
- Its fast-shrinking workforce is 10 years older than neighboring countries.
*Still, China keeps reporting outrageous GDP numbers.* Lol
Where does the growth come from ?
Same place as the UK’s rosy inflation figures!
Who knows but they keep building modern infrastructure and improve the living conditions. Guess there is still enough money to go around when you don't have to fund wars all over the world.
@@herrwolf5184Unlike the prosperous taiwanese, 964 million chinese earn less than 282 dollars a month.
Living conditions improving when homes aren't finished and people lose money? Hmm.
@@TheRealBlueValhalla Didn't know they were living in a half finished home all this time. It's the culture of Chinese people to save, I'm sure they have a lot of money and real estate.
The ghost city investment bubble has finally burst, starting in Hong Kong. This will not only affect the company but also regular chinese citizens as well as supplying companies.
As in China the investments in stockmarkets are very risky and manipulated at will by the state their citisens invest in these big real estate projects not to live in but as some sort of "saving account". The full bankruptcy would vaporise 25-30% of GDP.
This will financialy ruin millions of Chinese and will indirectly affect China's influence in the world and might have big consequences inside the Communist Party.
Actually it wont affect regular Chinese people. Most Chinese own their own homes. Most of these building projects are actually were for second and third homes.
@@amunra5330You are right that they will not lose their housing but these apartments are like "piggybanks" for pensions and such.
@@amunra5330But it represents investments using hardworking money .
This will affect the hole world, not only China.
@@amunra5330 Isn't it funny how a supposed Communist economy has very few social welfare programs? Chinese families are still expected to raise a family (thanks to the CCP's constant child policy revisions) and also act as carers for elderly family members.
Evergrande and China's economy are the same thing.
Wait till country garden goes down too. If you think china evergrande is the biggest, think again hahaha
@@Anonymous-wt6ii
Right! This news item is from Oct 2023:
_Country Garden, China’s largest private developer, has warned of a potential default on its international debts in a significant blow to the country’s embattled property sector_
_The company, which has about $200bn in liabilities and close to $10bn in dollar-denominated debt, said in a statement to the Hong Kong stock exchange that it expected it “will not be able to meet all of its offshore payment obligations” when they are due._
_“Such non-payment may lead to relevant creditors of the Group demanding acceleration of payment of the relevant indebtedness owed to them or pursuing enforcement action,” the company said on Tuesday._
@@Anonymous-wt6iigonna be catastrophic if country garden falls
True! China is in bankrupt, too.
Yes, and China will try to improve its economy of 1.4 billion mouths, including 28 million millionaires, by invading Taiwan.
PYRAMID SCHEME
No, it was a ponzi scheme.
Homes for home owners? More like home speculators 😂
CORRECT!!!!
Or Airbnb like USA.
Exactly most of these projects were for second, third and even fourth homes for people trying to make a living off of reselling homes.
चाइनीज टोफू ड्रैग थर्ड ग्रेड 😂😂
@@amunra5330 "Invest in _assets;_ not liabilities." For decades, that has been the slogan of Rich Son, especially in places like California, London, Vancouver.
Evergrande operated a giant negative financial feedback loop. Evergrande became Everdown. Imagine how many Chinese citizens paid their life savings to a company that (1) never built the homes it promised to build, and (2) will never reimburse the monies it received.
Exactly, and I see a lot of people rejoicing with this news, when like in every country in this world, it's us regular joes that get shafted by our own governments again and again.
There’s more than to this. The problem is, people can’t speak about it publicly. They’re not allowed to complain even in social media. It’s like This is close to ponci scheme, the developer get advance money from buyers to build another and another buildings. Too much freedom is bad but extremity leads to totalitarianism.
This will have a domino effect in the economy for both businesses and individual citizens. Evergrande is not the only developer going under. This is going to hurt.
@@flux_inverter4500 "This will have a domino effect in the economy . . . ." My thinking as well.
@@BlythPer-co1ug"people can’t speak about it publicly." Freedom of speech isn't a thing in Communist China. Any criticism of the CCP, direct or indirect, might get the speaker the Uighur treatment.
Corruption is the major issue in China.
Дело не в коррупции совсем . Вы просто не сталкивались со строительством крупным
Paradoxically it's also a strength, the top of the CCP can always just use someone's corruption to get rid of them if they're an opposition. Corruption is an open secret
@@tomlxyzIsn't that basically Russia?
Every country has corruption.
270 Billion Euros , wow.
Greed.
Massive corruption too.
@@B.D.E. Greed is the root of corruption.
Greed for Growth
China has very little ways in which people can invest money, other than in property. The result was that the buyers never wanted to finish or furnish their apartments, because they were never going to live in them and because the Chinese generally do not want to buy anything where they would have to strip out existing finishes to suit their own taste. The result is a vast over-supply of half or fully built but unfinished apartments, which of course stalled the market and left developers in huge debt, with little ability to attract new "off plan" buyers as common sense would tell them that the developers may be unable to continue. There are vast estates bought as investments and never occupied. It was always a strategy doomed to fail.
Most Chinese people choose to save rather than invest in real estate. Because a regular house costs over $100000, and in a big city, a house may cost $1 million, not everyone can afford this threshold
Banks play a major role in this disaster by releasing funds in trust account to developers illegally. To pass on the responsibility to property buyers, Banks are covered by gov obviously
man...what a mess!
Classic bubble, there are more housing units than Chinese. Too many people bought too many units and the developers will run with the money while the property renters will lose their life savings.
The snowball effect will be catastrophic. Imagine all the mortgage’s payments stopping. Lenders will be next to fall.
isn't the $140 billion the difference between their assets and their debt? That's the starting point for how much investors are going to lose...
Worst part about this whole thing is we'll start seeing these buildings collapse on their own within 20-50 years. They are Chinese made after all... 🤣
Make it half 😊 When traveling China and central Asia on bicycle I experienced what their "Silk Road asphalt" is like. One cm thick with cracks and holes appearing after 6 months.
Great reporting!
I would question the quality of the construction of those buildings
China 🇨🇳 may be in the same situation as Evergrande is.
- That's why Moody's rating agency moved China down to "Negative" rating last year.
It had concerns about China's ability to pay its world-highest debt, at $55 trillion.
who do they owe? mind my ignorance on the subject please. When speaking about a country's debt it seems everyone owes, U.S.A. included, who do they owe the money to though?
@@jaegerschtulmannEverybody! Mostly from foreign investor groups who bought China's bond.
American debt is different, most of it is from American.
@@jaegerschtulmannRemember Chinese are poor. Rich countries are in G7 group.
@@AhmetTekin101which country is rich
@@lilacer6841 Remember, most Americans retired a milliomair!
It’s 300 billion in debt, not 140…
depends on the currency
Same as happened here: hubris. People just before 2008 thought homes would keep doubling in value every 10 yrs forever. Properties rarely double in value in 10yrs, rarely. When you confuse rarely and forever, 2008 and Evergrande happen: tada.
US did TARP to protect people...let's see what China does
We’ve been watching this for years. So crazy. $140b. Doesn’t seem like a real number.
All those empty, unfinished houses and flats. What a tremendous waste of resources.
Not billions of dollars in debt ‼️..
HUNDREDS of billions.
How to do you get yourself into this mess the anchorman asks? simple: greed!
Buying off the plan always worries me.
This is very serious. Even for the world markets...
Hong Kong can not order mainland companies to liquidation, only the hong kong subsidies
The gov already said they will bail out the people who has invested. Evergrande was the biggest for many years in the past, but there are dozens of Evergrande size companies now. The projects can easily be contracted to them. Don't see how a hong kong court can order a chinese company to liquidate. Although the chinese gov will probably not bail out Evergrande as they normally only preserve the stability of the people and not companies so they may not have much choice but to liquidate.
Also most of these homes are 2nd and 3rd homes bought as investments as chinese people primarily use real estate as an investment rather than the stock market. Which is why you dont see much liquidity or equity in the HK exchange as they are mostly institutional transactions.
They built enough homes to house 1.4 billion people at most? That's unbelievable.
(Reuters) - "Even China's population of 1.4 billion would not be enough to fill all the empty apartments littered across the country, a former official said on Saturday, in a rare ..."
Just imagine how many fund houses, asset managers, and their bankers in the US, Canada, UK, Europe and Japan are going to be thrilled.
They already priced it in. They knew the loss was coming. There's only 26% external investment too.
The only issue is the next batch of property company bankruptcies... there's no issued info on how much external investment went into those companies... let's see.
A lot of investment banks and broker dealers were pushing Chinese bonds. Some pension funds will see a hit and other "managed" investments. Partly why I avoid bond funds when interest rates were low. Only direction they can go is down. The fall out from the real estate collapse in China will be entertaining and painful.
Evergrande's debt is more then a lot of smaller countries have for their national debt
So basically large company had to face its consequences instead of getting bailed by the govt?
That is because the chinese government IS Evergrande
how will the gov't bail out itself?
@@icu17siberia 😂😂😂
Why would the Chinese government want to spend money on a bailout? From their perspective it's better to let the creditors take the blow and the Evergande managment the blame.
Evergrande can't be saved. Even if all the current debt was cleared, it would still cost money to keep the company running. It doesn't have any income to cover it and nobody in their right mind will lend them anything or invest in it. So the Chinese government would have to keep pouring money into the company forever.
3:44 couldn't they find someone who can fluently speak English without ah um ah um ah every five seconds
Don’t forget the narrator voiceover at the start, calling Shenzhen “Shenchen”.
Insiders estimate the unfinished developements could hold up to 1.4 Billion people? I think you got something mixed up.
Some of those buyers will probably die before their apartment is finished. Very sad situation. The government needs to take a lot of responsibility for this debacle.
worse, they'll never recoup their investment...maybe 1/3 of what they put in. We'll see
Keyword Hong Kong will Beijing comply
When debt gets that high, some of the blame has to go to the lenders.
Problem is that apartment purchasers are expected to be liable for their debt when they sign a purchase agreement, even though the apartment is not yet built. They are now also creditors on the hook.
If this was Russia those top executives might want to stay away from open windows. I guess we'll see how China handles it's oligarchs?
1.4 BILLION people? That doesn't sound right
1.4 million i guess. That also sounds ridiculous.
Well they have full on megacities that nobody lives in. Like millions of apartments... 1.4 bill sounds off but i'm sure its 100's of millions
@@mernkanthri3941 just search how many city china destroy after constructing it
and they are counting how many house they built, not how many still stand today
and in house a family of min 3 people live in China so it mean some 450 million house or less
Yaw not been following the news… The 1.4b number is very likely off by at least another .5b
Around the 2:14 mark. I think there’s a mistake? 1.4Billion people is everyone! 😮
what i have read this isnt a mistake... the massivly over build and have now more homes than people
Thats not a mistake, its true, in china there is housing for almost 3billion people, its just a lot of it is unfinished or too expensive.
All their money went to speculating on the market, prices were way over their market value.
This is the outcome.
@@jowarnis , Does it makes sense to you to learn that it can be expensive with abundant goods?
@@jowarniseye opening.
There are enough empty appartments in China to house 1.5 to 3 billion people. Why is there single construction company left in China? 😂
Greed, corruption, recklessness, arrogance and opulence always comes to an end…. China needs businessmen like Li Ka Shing, the billionaire with a $20 dollar watch!
Not China but whole world need these kind of Bussinessmen
You mean Joe Biden and Hunter Biden.
why waste $20 on a watch when your phone tells you what time it is?
@@perfectallycromulent in certain professions such as in the medical field, looking at a wristwatch is more efficient than holding and opening your phone. In my experience at least haha
@@enricomiguelrequilman6000 Also if you drive a bicycle. It's easier to look at a watch than to stop and take out a phone...
What an interview...
The Chinese correspondent’s englisch was a little bit shaky. They should have chosen someone with better pronunciation.
Did they say 1.4 billion people??
All that wasted space, Gaza wasted people who NO country wants.. it's a match.
So much building material and energy wasted. So much CO2 emissions….we are cooking ourselves in our own sauce.
you are wrong if you think that you won't be affected by this. this will have a domino effect across the world
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The debt is more like half a trillion and people will not see any back
Will China accept the Hong Kong court ruling
Yes, because Hong Kong is part of China 🇨🇳
Does China have a choice? What are China's consequences for not accepting it?
You're making the mistake of presuming China and Hong Kong are two different things. That is no longer true, not since the CCP destroyed Hong Kong.
What about Evergrande shipping, weren't they the company stuck in the Suez canal, that must have cost them a few quid.
The unfinished plots can house 1.4 billion people ?!! Did I get that right ? oO
What i don't understand is why citizens kneel and do not protest.
GPD growth in China? the truth is 2023 was Negative creative accounting shows 5.25% is not true. The fact remains Poor Quality materials and building practice most of the buildings will have to be demolished those that pass building control will have huge fitting out costs. The truth is the Property market in China has Collapsed. Banks will have to Close and those left will not be able to Fund the fitting out costs.
Too bad.
Bubble?!
Those buildings would have fallen apart anyway within the next 20 years.
Who will step up and assume all the debt that goes with these unfinished projects?
The poor chinese people who got scammed yet again by their corrupt government and businesses.
Vultures.
How did PWC fail to verify assurance? They’re evergrandes auditor
PWC! Auditor in name?
What too fast uncontrolled growth can do.
A bubble is not growth, and THAT is the problem
Wow lots of jobs will be lost, this is the problem when you rely too heavily on one sector of your economy for growth hmmmm Australia.
$300 billion is peanuts compared to the $1 trillion bailout of US banks during the mortgage crisis in 2008. And no one went to jail. In a sick twist, US bankers used some of that loot to award themselves with Christmas bonuses 🎅🏼🎄💰
I thought they went under last year ?
Spoiller: Evergrande to rebrand to Evergone in the coming weeks 😂
The Chinese government should bill them out.
Do you think that China would want it's currency being owned or shipped out by foreign bodies?
The chinese government IS responsible for sustaining the ponzi schemes like with Evergrande so it will be hard to bail them out
What is the deal with the map you are using? You do know that Taiwan has never been a part of the People's Republic of China!
The company that is borderline running a ponzi scheme here.
When this only way of investing for regular chinese citizens fails, so will the economy. You can't just invest in the chinese stock market as a normal person. Bring your money to one of countless local banks and risk losing it all when they go kaput eventually as they always do. When the housing market fails, there is no way of actually saving money at all. That means there is no way to climb up the social ladder anymore and no incentive to even try.
Most Chinese people choose to save rather than invest in real estate. Because a normal house costs over $100000, and in a big city, a house may cost $1 million, not everyone can afford this threshold
Rapid onstruction is first sign of double digit gdp growth & over construction is fist sign of downfall .
The biggest corporate crash in China...... So far.....
So who are the creditors? Any US funds ? Cause that’s gonna be a huge hole that can’t be filled
About 150K employees at its peak. Thats 2,000,000 in debt per employee.
Would have been cheaper to quadruple the pat of every employee they ever had & ask them to stay home. 😁
that not how business work
When almost all china developers are dying, its good for overseas developers comes in and invest but china doesn't allows that
Imvesting in China is suicidal.
So a ponzi scheme...
That's only half of it. It's a pyramid scheme built on top of a ponzi scheme.
Money doesn’t get lost.. it is still there.. somewhere..
Yes, as said the reporter it's mostly built, there is no liquidity, how do people get their money back when their money is spent but the building is not finished and the company building them is bankrupt?
Ouch. I don't agree with a lot of what China does but when are they going to get a break?
The USA has a LOT of unoccupied office space. I wonder when that issue will start costing the developers/investors real money?
So Woo Chin Loo is a Billionaire and workers don't get paid?
Reminds me of the days of Euro Royalty, exact same deal lol
How could the Chinese government allow this to happen,🙈😡
Money from taxes 😊
Quite easily in fact!
They're imposing heavy taxes and they're therefore a big CAUSE of what is effectively a giant Ponzi scheme!
Greed
This is a good lesson for companies. Don't overextend yourselves.
And Hong Kong property is still ridiculously overpriced so if there is a bubble, it hasn't bursted
Hongkong has high prices because of high demand and low supply
Wait till they find out about Country Garden. 😂
Still waiting for proof on uyghurs is been 8 months
That, that was something that.
Look at that massive scurge on the planet! All that sprawl and pavement and clear-cutting. So gross.
This happen to Vietnam some time before too and now so many housing and building already build but no body buying or invest so now just like a ghosttown. Shame to corrupt government
Double digit growth? You fool!
Will the mainland Chinese authorities simply ignore the Hong Kong ruling? No wonder so many outside China are divesting as quickly as they can.
Damn! I can't imagine getting fleeced like this!
Lots of bank managers getting kickbacks money 💰 to approve bogus loans. That’s why they collapsed
She isn't very good.
Who are their creditors? In China, Evergrande is not too big to fail.
did he say 1.4 billion people who can fit in unfinished developments? That is the population of entire CHINA .. how can it be true ? or is it that bad?
(Reuters) - "Even China's population of 1.4 billion would not be enough to fill all the empty apartments littered across the country, a former official said on Saturday, in a rare ..."
You can talk about it for ages, but is very obvious:
It has been an enormous ‘ pyramid game ‘.
Liquidation isn’t even possible anymore. Solidified problem.