Evergrande, the world’s most indebted property developer, has been accused of fraudulently inflating its revenues by £62bn.
The China Securities Regulatory Commission said Hui Ka Yan, the founder of property giant Evergrande, “instructed other personnel to falsely inflate” the company’s accounts in 2019 and 2020.
Who is – and quite literally, possibly at least – going to get it in the neck for this? For anyone who thinks this is the only such thing in China’s property industry is dreaming.
The govt needs to do this pour encouragez les autres but I am not sure that they want to dig too far. Every state governor, indeed every minister has his hand in the till .
Too true Otto.
They need to find some Epstein-like underling that they can execute for everything.
In business, as everywhere, Winnie the Flu can’t purge quickly enough to keep up. He had to sack generals he’d appointed relatively recently when their graft was discovered. I’d imagine that most developers are guilty of something like this. And China has more than 100,000 of them.
If I was a holder of USD bonds issued by a China developer, I’d write down the remain 5c of value and stop wasting money on lawyers.
Chinese officials know most of this is going on but they don’t want to be the ones calling a halt because of the effect it will have on their economy so it just carries on until they haven’t got enough fingers to stop the dam bursting.
We aren’t much better here, as the 2008 financial crash showed. The main difference is that those who were pointing out the problem were laughed at, until they got stinking rich. In China pointing out the problems earns demotion, at best. Far better to pretend and, to mix metaphors, point out the emperor has no clothes.
The advantage the Chinese have over us is that regardless of the financial shenanigans they have the actual industrial base. When we have a financial crash we have nothing left – an investment bank literally disappears when it goes bust, because its just a legal fiction. But when a steel mill or factory goes bust its still there, for someone else to take over once the debts are purged, and production can continue.
@Jim – half of China’s economy is dedicated to building infrastructure that it doesn’t need, funded by money every bit as funny as that which inflates the City. Roads no-one uses and apartments no one lives in are just as worthless as financial instruments after a crash and the businesses which built them worth no more than the corpse of Bear Stearns.
The flats they build are also largely made of tofu apparently. Sometimes painted or wallpapered to look like brick.
” half of China’s economy is dedicated to building infrastructure that it doesn’t need, funded by money every bit as funny as that which inflates the City. Roads no-one uses and apartments no one lives in are just as worthless as financial instruments after a crash and the businesses which built them worth no more than the corpse of Bear Stearns.”
That all may be so, but they’ll have more productive capital left after a crash than we will.