Evergrande Disaster

China’s property collapse, particularly with Evergrande, can be attributed to the country’s one-child policy, declining birth rate, and faulty population data. Evergrande’s growth strategy of borrowing money for land acquisition and selling homes before they were built resulted in massive debt for the company. Evergrande has over $320 billion in debt, making it the most indebted real estate company in the world. The high demand and speculation in the real estate market, coupled with overbuilding by developers, has created a landscape of empty buildings and a lack of buyers. The collapse of the Chinese property sector, which is a significant part of the country’s GDP, could have global ramifications similar to the Lehman Brothers crisis. Evergrande’s shares have resumed trading after a 17-month trading hold, and the results are disastrous. The stock immediately plummeted, wiping out $2.2 billion in market value. Recent arrests at Evergrande Financial Wealth Management have further shaken investor confidence, with the stock falling an additional 25%. The potential consequences include reduced net worth for Chinese citizens, decreased spending, and ripple effects on global economies.