Order to liquidate property giant China Evergrande is just one step in fixing China's debt crisis
A Hong Kong court's order to liquidate the world’s most heavily indebted real estate developer is only a tentative step toward resolving a debt crisis that is haunting financial markets and dragging on the Chinese economy
BANGKOK (AP) — A Hong Kong court’s order to liquidate China Evergrande, the world’s most heavily indebted real estate developer, is only a tentative step toward resolving a debt crisis that is haunting financial markets and dragging on the Chinese economy.
Evergrande owes $340 billion to its creditors. Experts say it’s unclear if Monday's order will be enforced in mainland China, where the company and 90% of its assets are based. Lenders inside of China already have claims on most of those “onshore” assets, and Beijing is likely to favor them.
The order by the Hong Kong High Court also is not a remedy for the crisis of confidence haunting China’s financial markets.
The liquidators acting on behalf of the creditors in the Hong Kong case “will have a relatively straightforward path to trying to claim offshore assets," Brock Silvers, managing director of Kaiyuan Capital, said. “But the company has very few offshore assets. Almost everything is onshore, and onshore the liquidators’ authority simply isn’t recognized.”
