Evergrande collapse shows China's poor learning from India's IL&FS fiasco: Uday Kotak

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.

Policymakers seem to have taken too long to act on the Evergrande issue, believes veteran banker Uday Kotak. Hinting on how China could have learned from the US and India’s similar cases, he said that the company imploded two years after the first news of trouble.

“Evergrande China finally implodes, two years after the first news of trouble. Policy makers seem to have taken a long time to act. China may have some learnings from the US post Lehman and India post IL&FS,” the veteran banker tweeted.

On September 27, Hui Ka Yan, the billionaire chairman of beleaguered Chinese property developer Evergrande Group, was placed under police control, Bloomberg reported. Hui was taken away by the police earlier this month and is being monitored at a designated location.

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

Beijing sees 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.

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 realty players as a threat to the financial system and the health of the economy.

The collapse 

Earlier in April 2023, the 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.

But on August 17, Evergrande filed for protection from creditors in a US bankruptcy court.

On August 27, it posted losses for the first half of the year (January-June) to the tune of 33 billion yuan ($4.53 billion), compared to 66.4 billion yuan lost a year back, according to a statement published on the Hong Kong Stock Exchange website.