One third of China’s property developers will struggle to repay their debts in the next 12 months, according to a new report, as the sector reckons with increasingly serious headwinds from falling sales, restricted access to credit and a wider downturn.
Even if the embattled developer Evergrande manages to meet its latest debt repayment and averted a potentially disastrous default, analysts at the credit rating agency S&P warned that many other property companies could be heading towards bankruptcy.
Although Evergrande has emerged as the symbol of the debt-laden structure with liabilities of $300 bn at home and abroad, the Chinese property sector as a whole owes an estimated $5 trillion, according to analysts. That is one-third of the country’s entire GDP and roughly equivalent to the whole output of the Japanese economy, the world’s third largest. Property companies must come up with $92 bn as bond payments mature in the next year.
Meanwhile, a few border cities in northeastern China started to tighten COVID-19 measures, restricting travel and limiting gatherings in public spaces, and some declared a pre-war mode of vigilance and monitoring, as China combats an outbreak hitting mainly the north.
In northeastern Heilongjiang province, which shares a border with Russia, Heihe city detected one local confirmed case, plus three asymptomatic cases, which China counts separately from patients with confirmed symptoms. The city of 1.3 million demanded the suspension of manufacturing activities and business operations in urban areas, except for essential ones.