Large Chinese Company’s Downward Spiral Causes Headache For Beijing.
Evergerande, a large company with large assets cannot pay its debt and that is causing serious trouble for the Chinese government. (CNN)
“Fitch Ratings on Thursday declared that the embattled property developer has entered “restricted default,” reflecting the company’s inability to pay overdue interest earlier this week on two dollar bonds. The payments were due a month ago, and grace periods lapsed Monday.
Evergrande’s apparent failure to pay that interest has revived fears about the future of the company, which is reeling under more than $300 billion of total liabilities. Evergrande is massive — it has about 200,000 employees, raked in more than $110 billion in sales last year, and owns more than 1,300 developments in more than 280 cities, according to the company.”
Beijing is facing a serious crisis with the debt default of one of its biggest companies. This comes a very precarious time for the nation as it tries to face the World and show that it can function as a Global superpower. The Communist Party has been consolidating all power in Beijing in hopes that a top down approach will work to strengthen everything from defense to the economy. How well that plays out is being put to an initial test by Evergrande.
