"China's Biguiyuan Default Crisis Expected to Have Greater Impact Than Evergrande Group"

"Major Shock to China's Economy" Report
Potential Impact on Employment and Financial Markets

Analysis suggests that the debt default crisis triggered by Chinese real estate developer Biguiyuan (Country Garden) has a much greater ripple effect than the default crisis experienced by Evergrande Group at the end of 2021.

[Image source=Yonhap News]

Taiwanese media ETtoday reported on the 15th that Biguiyuan's financial crisis will deliver a significant shock to the Chinese economy, surpassing Evergrande. Yan Weijin, head of the Chinese real estate research institute E-House Research Institute, expressed concern, saying, "The market can no longer withstand the risks of a real estate company with a scale of 1 trillion dollars."

Singapore's Lianhe Zaobao also cited analysts, diagnosing that "due to Biguiyuan's debt scale and China's weak economic recovery, if the crisis is not resolved, a chain reaction could occur throughout the entire market."

The company has 33,207 partner firms and 70,000 employees, who could face a mass unemployment crisis in the worst-case scenario. Additionally, there are 900,000 homes with unpaid payments, which could have a cascading effect on homebuyers.

According to Bloomberg, as of the end of last year, Biguiyuan's total debt reached 1.4 trillion yuan (approximately 255 trillion won). The problem is that Biguiyuan's crisis could spread to the entire real estate and financial markets.

Yan Weijin pointed out, "For Biguiyuan to properly carry out various projects, the average monthly sales must be over 22 billion yuan (4.04 trillion won), but this standard was only met from January to April, and the sales in July were only 12.1 billion yuan."

Another Taiwanese media outlet, E-Ping News Network, also predicted that considering Biguiyuan's project scale is four times that of Evergrande, if the crisis escalates into a debt default, the impact on the Chinese real estate market could be much greater.

On the same day, the National Bureau of Statistics announced that real estate development investment from January to July fell 8.5% compared to the same period last year, and the cumulative sales area and sales amount of housing nationwide from January to July decreased by 6.5% and 1.5%, respectively, compared to the previous year.

Chinese authorities are also on high alert regarding the Biguiyuan crisis. Fu Linghui, spokesperson for the National Bureau of Statistics, expressed the government's stance on the Biguiyuan situation for the first time during a press conference on economic indicators.

Spokesperson Fu said, "Currently, the real estate market is overall in an adjustment phase, and some real estate companies are facing management difficulties. In particular, the debt risks of some major real estate companies have been exposed, affecting market conditions."

However, he added, "These issues are phased, and as the market adjustment mechanism gradually plays its role and real estate market policies are optimized, the risks faced by real estate companies will gradually ease."

This content was produced with the assistance of AI translation services.