By John Q. Hosedrinker 
Evergrande, once China’s largest property developer, has been delisted from the Hong Kong stock market after its spectacular downfall. This marks the end of the road for the company, which was built on massive debt and saw its valuation plummet by over 99% after the onset of the crisis. The company’s collapse, fueled by over $300 billion in debt and regulatory changes, has significantly impacted China’s economy, contributing to a property slump and decreased consumer spending. Experts predict more property firms will likely collapse, suggesting the crisis is far from over.
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Evergrande: Chinese property giant delisted after spectacular fall, and honestly, it feels like a long time coming. We all saw the writing on the wall when they initially defaulted on their bonds. It was a slow-motion train wreck, a controlled free fall that’s been playing out for years. The fact that they’re now delisted is, in a way, the official confirmation of what many already knew. It’s the end of an era for a company that once epitomized China’s booming real estate market.
It’s interesting to consider how this was telegraphed in advance, and how the Chinese Communist Party (CCP) distanced themselves after the restructuring. The damage, I think, will mostly be contained within China and to some investors closely tied to the company. The impact on the global markets, while present, is not likely to be the cataclysmic event some had predicted. A lot of the fallout was already factored in.
The question on everyone’s mind: what happens next? While the immediate shock might be over, the ripple effects will continue to be felt. There’s concern about the debt, the unfulfilled projects, and the impact on average citizens who might have lost their savings. The situation, as I understand it, is that the proceedings are still ongoing, with no final settlement or liquidation yet. And to make things worse, the article itself states that the bottom isn’t expected in the next two years.
It’s impossible not to think about the bigger picture, too. The CCP’s focus on sectors like robotics, EVs, and green tech is fascinating in its own right. But how will citizens react when they witness a significant chunk of the economy essentially wiped out? It raises questions about whether similar bubbles exist in these new, favored industries. The shift in economic priorities can feel jarring, and the anxieties about the future are understandable.
The fact that Evergrande’s headquarters in Guangzhou had 24/7 police presence for years speaks volumes. I imagine there was an initial incident that led to such measures. And let’s not forget the visual: incomplete buildings, unsold properties. It’s a potent symbol of an economy grappling with overexpansion and the inevitable consequences.
It’s tempting to say that this is a harbinger of global market crashes, and I can appreciate the concerns. The collapse, though, doesn’t seem likely to trigger a global meltdown, primarily because most of Evergrande’s debt was concentrated inside China with minimal exposure outside the country. The fear of “too big to fail” is real, but the outcome is never what people expect.
The manufacturing costs in China are high enough for Western players to pull out and source production from cheaper countries. The shift in manufacturing, with companies diversifying and not putting all their eggs in one basket, will bring its own impacts. The US attempting to bring production back on-shore could also have a big impact.
Construction is still happening at speed, despite the problems. It makes you wonder about the sunk cost effect. Is it a matter of continuing to build to avoid admitting failure? Or is there more going on here? It’s a feature, not a bug of a command economy.
There’s also the human element. If you’ve made some deposits with Evergrande in projects that won’t be finished, obviously, you’re in trouble. A third of the economy, effectively laid low, is not a good thing, even in areas that aren’t commercial. The growth has been there, undoubtedly, some people are still seeing the fruits of this, but the risks are also apparent. It’s a complex situation with no easy answers.