China’s large real estate company’s downfall

There was a report on July 27th by Bloomberg, a Chinese news company, about the Chinese government’s move to regulate the real estate market. As this regulation has begun in China, the Evergrande group is experiencing a financial crisis. According to the balance sheet of the group, it is experiencing 300 billion dollars of debt. Hopefully, the group has successfully passed their bond interest payment date, noting that they have dealt with their creditor about it. They need to pay back 50 trillion dollars by this year, but due to the government’s regulation, it seems that they will need to pay it back by their apartment in-kind.

The Evergrande Group, the second-largest real estate group in China, is in a financial crisis due to government regulation. The government has announced that this action was intended to stop the overheated real estate market. Therefore, companies and groups that had large amounts of debt have shown signals of bankruptcy. The Evergrande group was no exception. The real problem is that if the group fails to pay their debt, there are possibilities that the apartments they were building and planned to build will not be completed, which in turn will cause more victims. If this group collapses, it will incite damage beginning from the employees to a scale that will affect the entire country’s economy.

It surely looks fair that lowering the cost of real estate makes people who did not have enough money to afford them to get a better quality of life even if it takes some time, but it also seems sure that this regulation will cause big chaos in the near future if the government doesn’t help the group.

By: Sonbom Lee