Evergrande and the China Property Bubble – Business and the Politics
About the Event
Evergrande has debts of over USD300 billion and is reportedly the most indebted property company in the world. Evergrande is struggling to repay debts, or to pay suppliers and contractors. Cash flow is a major problem as construction projects stall from the lack of payments. The situation not only raises cause for concern that Evergrande may collapse, but also that this will have a wider impact on the economy in China and even internationally. The problems for Evergrande seemed to become visible when the PRC Government introduced rules to restrict the borrowing costs of developers, which placed a cap on debt in relation to a firm’s cash flows, assets and capital levels.
This situation matters because of the scale of Evergrande, which is the second largest property developer in China. Evergrande has more than 1,300 real estate projects in over 280 cities, with a property services management arm involved in nearly 2,800 projects across more than 310 cities, and other business units engaged in a wide range of industries, including electric vehicles, health-care services, consumer products, video and television production units and even a theme park. In tital the company has over 200,000 employees. The scale of the company has raised the question of whether Evergrande is too big to fail and whether the PRC Government will intervene. This in turn raises questions regarding the confluence of business and politics in the PRC, and what this means for other large companies. Our panelists have decades of experience addressing such questions.
About the Speakers
George Magnus is an independent economist and commentator, and Research Associate at the China Centre, Oxford University, and at the School of Oriental and African Studies, London. George was the Chief Economist, and then Senior Economic Adviser at UBS Investment Bank from 1995-2012. Whilst at UBS, he served for four years as the Chair of the Investment Committee of the pension and life assurance fund. For four years until 2016, he served finally as an external senior adviser with clients of the investment bank. He had previously worked as the Chief Economist at SG Warburg (1987-1995), and before that in a senior capacity before ‘Big Bang’ at Laurie Milbank/Chase Securities, and before that, Bank of America in London and San Francisco. George is the author of ‘Red Flags: Why Xi’s China is in Jeopardy’, and ‘The Age of Aging’ (2008), which investigated the effects of the unique experience of demographic change on the global economy; and Uprising: will emerging markets shape or shake the world economy?
Steve Vickers is the founder and CEO of Steve Vickers & Associates (“SVA”)(www.stevevickersassociates.com), a specialist risk mitigation, corporate intelligence and security consulting company. Steve has over 40 years experience in Asia in both government and the private sectors. Steve is an acknowledged expert on political and security issues in Asia Pacific and is a frequent commentator on political risk and crisis management issues. His opinion is regularly sought by the international media. For the past 28 years, Steve has conducted numerous sensitive- business intelligence assignments, crisis containment issues and high risk issues facing international corporations. He is a member of the International Institute of Security.