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As China's property giant Evergrande veers toward collapse, its unpaid debts spark protests

Alice Su, Los Angeles Times on

Published in News & Features

Even if the parking spots and shop spaces were real, one of the women said, no one wanted them. Her name was Li, and she’d supplied decorative materials for Evergrande in Anhui province. They owed her more than $1 million, she said.

“We have four parking spots from Evergrande already,” Li said.

Another woman, a construction manager from Shandong who asked that her name not be used, agreed. She was owed more than $300,000 and had dozens of migrant workers waiting for payment at home. “I owe this worker $1,500 and that worker $750. Should I give each of them a brick? A toilet? A room?”

Analysts expect that Chinese authorities will move to limit the damage to the economy if Evergrande defaults. The potential for social and financial instability would be too high at a time when the Communist Party is preparing for Xi Jinping’s transition to his third term next year.

“The most likely endgame is now a managed restructuring in which other developers take over Evergrande’s uncompleted projects in exchange for a share of its land bank,” and in which China’s central bank steps in with liquidity support, said Williams. Homebuyers would likely be prioritized in that scenario, he said.

It’s less clear what would happen to the people who came seeking their money in Shenzhen.

 

“They sacrifice one group of people in order to save the majority,” said Ye Hong, 55, a clothing exporter from Ningbo who had invested his retirement savings of nearly $800,000 in Evergrande’s now-frozen wealth management products.

Ye had come to Shenzhen for the first time in his life hoping to get his investment back. But after trying to negotiate, seeing the police everywhere and hearing how much the others were owed, he wasn’t hopeful.

“I just trusted them too much,” he said.

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(Ziyu Yang of The Times’ Beijing bureau contributed research to this report.)

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