Evergrande is the largest real estate company in the world. They are Chinese, and are nominally worth around 2% of China's GDP. They are going bankrupt, and China can't bail them out, or take any kind of action to save them, without devaluing their currency, which is out of the question.
Lots of people are going back and forth on how bad this is going to be when the markets open in china on Wednesday (or Thursday, depending on your time zone).
Personally, I am not optimistic about this. People keep saying it's not another Lehman Brothers, because Evergrande is roughly half the size Lehman was when they went under. The size of Lehman isn't what made their bankruptcy so bad, though. It was the leverage. Evergrande's leverage seems pervasive enough to cause contagion, outside China, but there's no way to really know, because we are dealing with China, so the data is unreliable. At the very least, I would maybe consider keeping your pantry well stocked this fall, because this is going to be rough on the already stretched supply chains. Even if things somehow seem ok at first when markets open, that could be the CCP covering things up like they did with covid, which will only make the problems worse.
If you want to see what I mean when I say leverage... The LA Times has some excellent reporting that shows how the entire Chinese construction sector runs on Evergrande IOUs, which are now worthless. Construction is roughly 30% of China's GDP. When the entire chinese construction sector collapses, it will be felt far beyond China's borders.
China Evergrande is struggling with more than $300 billion in debt. At its Shenzhen headquarters, angry suppliers and investors demand overdue pay.
www.latimes.com
www.rawstory.com
