China’s property sector financial woes ripple through wider economy with billions owed to businesses, workers

He added that Evergrande also had a wealth management product, which employees were required to deposit money into.

“For example, grassroots employees were required to deposit US$13,780, while middle and senior management executives may need to deposit more. The money can be redeemed after a year, but many employees around us were unable to withdraw it at all after one year was up. There was no money,” he said.

While CNA is unable to verify his claims, online databases have shown a long list of court cases filed against Evergrande and its subsidiaries regarding unpaid salaries and breaches of contracts. 

CHINESE ECONOMY UNRAVELLING

The reversal of fortunes of China’s top property developers is threatening to unravel the wider economy, as companies have pulled back on hiring with fewer people buying homes.

There are 1.5 million fewer jobs in the construction industry now compared to a year ago, according to data from the China Construction Industry Association in June this year.

“China had about 100,000 real estate developers before COVID in around 2019. And now the official figures show that more than 5,000 real estate developers have declared bankruptcy, and this process is still going on,” Hang Seng Bank chief economist Wang Dan told CNA.