China Won’t Save Evergrande for Many Good Reasons

china wont save evergrande for many good reasons

Sumary of China Won’t Save Evergrande for Many Good Reasons:

  • By Shuli Ren | Bloomberg, With Chinese high-yield issues experiencing their worst selloff in a decade, murmurs are growing that China is poised to blink and relent on its property tightening measures.
  • “In recent years, the company failed to manage its business well and to operate prudently amid changing market conditions,” an official said.
  • Because of working capital issues, Evergrande still has to deliver 1.6 million homes to consumers who have already paid.
  • The government never quite loosened its home purchase policies despite President Xi Jinping talking up his mantra of “housing is to be lived in, not speculated on” way back in December 2016. Even in the midst of the trade war, the Politburo pledged not to use the property market as stimulus.
  • Take a look at the one from 2010-2012, when the central bank hiked banks’ reserve ratios 11 times;
  • or the one between 2013 and 2014, when local governments implemented home purchase restrictions.
  • Both times, Beijing blinked after just a few months of negative property sales growth.

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