Chinese central banker says market can handle developer debt

China's central bank governor says financial markets can cope with the impact of a real estate developer that is struggling to avoid defaulting on $310 billion in debt

BEIJING -- Financial markets can cope with the impact of a Chinese real estate developer that is struggling to avoid defaulting on $310 billion in debt, the central bank governor said Thursday, in a new effort to assure the public the economy can be shielded from fallout.

Yi Gang’s comments by video to a seminar in Hong Kong added to indications Beijing has no plans to bail out Evergrande Group. Fears of a default have rattled financial markets, but economists say the ruling Communist Party wants to avoid sending the wrong signal at a time when it is trying to force companies to cut high debt burdens.

“The short-term risks of individual real estate companies will not affect the normal financing function of the medium- and long-term market,” Yi said, according to Chinese news outlets.

“Evergrande’s hazard is a market event that will be properly handled in accordance with market principles and law,” Yi said. Investors' interests "will be protected in accordance with the law.”