Evergrande, a Chinese property giant founded by Hui Ka Yan, has been accused of inflating revenues by $78bn (£61.6bn) in the two years leading up to the firm’s default on its debt. The country’s financial markets regulator, the China Securities Regulatory Commission (CSRC), fined Evergrande’s mainland business Hengda Real Estate $583.5m and placed the blame on Mr Hui for the financial misconduct.
Recent official data reported a 9% decline in property investment in China in January and February compared to the previous year. New construction starts also plummeted by 30%, marking their most severe decline in over a year. These developments underscore the ongoing financial strain on the property sector in China, as several major firms have defaulted on their debts.
The CSRC has vowed to crack down on securities fraud to protect small investors with stricter measures. This latest development follows Evergrande’s appointment of liquidators to assess its financial position and explore potential restructuring strategies, which could involve the seizure and sale of assets to repay outstanding debts. However, the Chinese government may be hesitant to halt progress on property developments in China, as many prospective homeowners await properties they have already paid for.
Evergrande, with over $300bn of debt, has been at the forefront of China’s real estate crisis. The challenges in China’s property market have been exacerbated by measures introduced in 2021 to limit borrowing for big real estate developers, which has put additional pressure on the industry. Despite these challenges, Evergrande remains a significant player in China’s real estate market and will continue to face scrutiny from regulators and investors alike as it navigates this difficult period.
