China Evergrande unable to pay wealth products due to cash crunch

CHINA Evergrande Group’s money management arm said it couldn’t make payments for investment products this month due to a liquidity crunch. 

The developer said it’s been disposing assets to raise money for the payments, but due to setbacks it didn’t receive proceeds and is unable to make the payments, the company said on its official WeChat account on Thursday (Aug 31). 

Evergrande, the poster child for China’s property crisis, is among a number of real estate firms that defaulted amid a housing meltdown over the last few years. Its protracted process to finalise one of the country’s biggest restructuring ever remains in limbo as key votes on its offshore-debt restructuring plan were delayed again this week. 

The company missed payments on US$5.6 billion of wealth management products in 2021, sparking nationwide demonstrations and putting pressure on Beijing to find a solution to avoid further unrest.

At the time, more than 70,000 people bought the products, including many Evergrande employees, as the cash-strapped developer tapped them for funding. BLOOMBERG