Welcome to the 199th edition of Trade War.
Hong Kong court orders troubled property developer Evergrande into liquidation signaling the denouement of a ‘slow motion implosion.’ Beijing’s ‘three red lines’ property deleveraging policy slams economy. And China likely to become a net exporter of deflation.
Struggle to sell Evergrande founder’s Hong Kong mansion and former company headquarters bad news for creditors. China’s reliance on exports amidst a weak economy leading to growing global trade tensions. And US firms report it is harder to make money on the mainland.
A year after he disappeared, financier Bao Fan resigns from his roles as chairman and CEO of boutique investment bank China Renaissance, according to a statement to Hong Kong stock exchange.
IMF predicts China growth to fall below 4% by 2026
Jake Sullivan: Beijing sees US in ‘terminal decline’
Chinese children’s bicycle maker confronts fertility crash
Evergrande’s ‘slow motion implosion’
“It really began all the way back in 2020. So the Chinese government announced something they called the “three red lines,” which was a policy that aimed to encourage and do some arm-twisting to get some of the bigger property developers, including Evergrande, to start to shed some of their debt,” I say to Ari Shapiro on NPR’s All Things Considered, following the announcement that a Hong Kong court has ordered the long-suffering Chinese property developer into liquidation.
“To a degree, they've been a victim of their own success. We've seen now for three years a slump in the property market, which has hit the economy very hard. And now we're seeing this spectacular, I guess, slow-motion implosion of Evergrande—brings us to [last Tuesday] with the announcement by the Hong Kong court ordering it into liquidation.”
“It will not have as direct an effect as Lehman did, by any means, on the global economy. Rather, what it will do is really start to put further pressure on an already-ailing Chinese economy. And that ultimately becomes very bad news for the U.S. and the rest of the world.”
Listen to the entire interview in the link below and read the transcript here.
China to become ‘deflationary force’
After many months of waiting for Evergrande to come up with a restructuring plan for its $300 billion in debt, a Hong Kong court has ordered the Chinese property developer into liquidation.
And it has been an epic fall from grace.
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