How China Plans to Avert an Evergrande Financial Crisis
The New York Times
Control of the banking system gives Beijing the tools to stop a broader collapse, officials believe, while censorship and police powers can stifle protests.
BEIJING — In any other country, the sudden collapse of a corporate titan with more than $300 billion in debt would send shock waves across the economy. Headlines would blare. Banks would shudder. Investors would panic.
A corporate collapse of that scale may happen soon. But it would be in China, where the Communist Party keeps a firm grip on money, corporate boardrooms, the media and the broader society. Those controls may be facing one of their toughest tests yet, but Beijing is signaling that it feels up to the challenge — even if it will first try to teach big investors and companies a bitter lesson about lending recklessly.
The financial world is watching the struggles of China Evergrande Group, one of the largest property developers on earth and certainly the most indebted. Last week, a deadline to make an $83 million payment to foreign investors came and went with no indication that Evergrande had met its obligations, raising questions about what would happen if its huge debt load went sour.