The firm said it was “necessary to reassess the terms” of the plan in order to suit the “objective situation and the demand of the creditors”.
Its property arm missed a key bond payment last week, and Chinese financial website Caixin reported that former executives had been detained.
Given the changing status of the Evergrande crisis and the property market contributing to one-third of the country’s economic activity, SPI Asset Management’s Stephen Innes said he could not “see China sitting back and watching the real estate market crumble”.
“This extensive reliance on the property sector raises concerns about its potential impact on various related industries, ranging from construction materials like steel and cement to household appliances and other consumer goods,” he told AFP.
“Any disruptions or downturns in the property market can have far-reaching consequences for these allied industries.”
VANISHED LIFE SAVINGS
China’s property sector has long been a pillar of growth – along with construction it accounts for about a quarter of GDP – and it experienced a dazzling boom in recent decades.
However, the massive debt accrued by its biggest players has been seen by Beijing as an unacceptable risk for China’s financial system and overall economic health.
Authorities have gradually tightened developers’ access to credit since 2020, and a wave of defaults has followed – notably that of Evergrande.
The long-running housing crisis has wreaked misery on the lives of homebuyers across the country, who have often staked life savings on properties that never materialised.
A wave of mortgage boycotts spread nationwide last summer, as cash-strapped developers struggled to raise enough to complete homes they had already sold in advance – a common practice in China.
Policymakers have come under intense pressure in recent months to unveil measures to support the economy, particularly the property sector.
But they are not keen on the type of bonanza unveiled in 2008 during the financial crisis, meaning the government could struggle to hit its growth target of around 5 per cent for this year. That would represent one of its worst performances in decades, excluding during the pandemic.
Source: CNA
