Country Garden reported a loss of almost $7 billion for the first half of the year, deepening China’s real estate crisis — and imperiling the broader economy.
China’s largest property developer, Country Garden, warned that it is on the brink of default as it reported a staggering loss of almost $7 billion for the first half of the year, deepening aThe saga of a company previously seen as one of China’s safest property developers and a pillar of the industry is the latest example of how real estate, which fueled the country’s economic boom, could prove its Achilles’ heel.
China’s property market accounts for about a quarter of its gross domestic product and two-thirds of household wealth, but post-pandemic uncertainty and a government crackdown on the sector have weakened sales and affected broader confidence in the economy.with the Hong Kong Stock Exchange on Wednesday, Country Garden said it had failed to grasp and react to the risks of the ongoing real estate slump, most notably in smaller cities that are home to most of its developments.
One of dozens of Chinese developers that have been unable to pay their bills in the recent housing crisis, it has debts of more than $200 billion. This month, the company said it missed interest payments on two loans, putting it at risk of default. In its Wednesday filing, Country Garden said continued deteriorating financial performance “may result in default.” The company said it is negotiating with creditors to avoid that.A Country Garden default, which would be the largest since the collapse of Chinese property giant Evergrande in 2021, poses an especially large risk for leaders as they struggle to revive confidence in the Chinese economic miracle.
The Chinese economy has already been beset by rising youth unemployment, slowing manufacturing and depressed spending amid a
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