Evergrande's massive debt crisis: A recent timeline of China property developer's growing challenges

Evergrande founder and chairman Xu Jiayin (File image)

Evergrande, once China's leading real estate firm, is now grappling with an estimated debt of $328 billion as of June end, making it a focal point of China's deepening crisis.

Beijing views the company's massive debt as a threat to the nation's financial stability and overall economic well-being. Experts express concerns about the crisis potentially causing global repercussions.

Furthermore, in a development that has come to light very late, founder and chairman Xu Jiayin, known as Hui Ka Yan in Cantonese, who was once China's wealthiest individual, was reportedly taken into custody by authorities earlier this month and is now under "residential surveillance". This was reported by Bloomberg on September 27 citing anonymous sources.

Authorities tightened on crisis-hit property developers' access to finance since 2020, which resulted in a string of defaults, most notably by Evergrande.

With real estate accounting for a sizeable portion of China's GDP, the industry has played a vital role in the nation's recent economic boom. Beijing, however, now sees the massive debt accumulated in previous years by Evergrande and other significant industry players as a threat to the financial system and the health of the economy.

Here is a recent timeline of how the financially troubled property developer's problems worsened.

- On September 16,  authrities detained several number of employees from the distressed property group's financial subsidiary, Evergrande Wealth Management. The charges have not been explicitly stated, and an official statement has been issued, urging the public to report any instances of suspected fraud to the authorities.

- On September 15, China's financial regulatory body has approved the acquisition of Evergrande's financially troubled insurance subsidiary, Evergrande Life Insurance, by the newly established state-owned entity, Haigang Life Insurance.

- On September 14, Moody's rating agency has revised its outlook for China's property sector from stable to negative. They mentioned that government support measures are likely to yield only short-term effects and cited the influence of slower growth on homebuyer spending. The agency also anticipates a roughly 5 percent decline in contracted sales in the coming six to twelve months.

- On August 27, 2023, the heavily indebted company posted losses for the first half of the year (January-June). Losses were 33 billion yuan ($4.53 billion), compared to 66.4 billion yuan lost in the same period last year, according to a statement published on the Hong Kong Stock Exchange website.

- On August 17, 2023, Evergrande filed for protection from creditors in a U.S. bankruptcy court.

- On April 4, 2023, Evergrande Group announced the conclusion of an offshore restructuring agreement with a group of creditors, marking a crucial milestone in the developer's debt restructuring journey.

- On July 18, 2023, in a notice to the Hong Kong Stock Exchange, Evergrande said it had losses totalling about $81 billion in 2021-2022 and that its revenues plunged by about half in 2021.