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Country Garden denies founder, chairwoman have fled China


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Country Garden denies founder, chairwoman have fled China

by AFP Staff Writers
Beijing (AFP) Oct 19, 2023
Chinese property giant Country Garden denied Thursday its founder and chairwoman had fled the country, as the debt-saddled builder flirts with a default that could send shockwaves through the industry.

One of China's biggest developers, Country Garden has racked up debts estimated at 1.43 trillion yuan ($196 billion) as of the end of 2022.

Unverified reports in Chinese financial media this week claimed founder Yang Guoqiang and his daughter Yang Huiyan -- the company's chairwoman -- had left China.

But the firm quashed the speculation Thursday, saying "the founder... and the group's chair of the board of directors are currently working normally inside the country".

"This rumour was posted with ulterior motives on multiple online platforms, causing a negative impact," the firm said in an online statement.

"We... reserve the right to take legal action over malicious rumours," it added.

Yang Huiyan took over as chair of Country Garden in March after her father stepped down from his position on the board.

But her company is now on the frontlines of China's property crisis that has seen a string of debt-laden builders either defaulting or threatening to do so.

Bloomberg News reported last month that the billionaire boss of beleaguered builder China Evergrande -- which defaulted in 2021 -- was being held by police.

Country Garden was due Wednesday to repay $15.4 million in interest but had not given an official indication of whether it had done so by Thursday.

- Sales slump -

Multiple news outlets, citing bondholders and anonymous sources, reported that the company had missed the deadline, putting it at risk of default.

Country Garden did not immediately respond to an AFP request seeking confirmation of the missed payment.

But the firm told Bloomberg on Wednesday that it "expects that it won't be able to meet all of its offshore payment obligations on time".

It blamed its struggles on "a deep correction in China's home market and its subdued sales".

Country Garden had 148 billion yuan in cash as of the end of June but it said it intends to use that to complete unfinished housing projects whose units were sold in advance, a common business model in China's property sector.

The country's real estate industry boasted decades of soaring growth that buoyed thousands of companies and became a major source of employment.

Today, construction and real estate account for around a quarter of gross domestic product.

But authorities are now on edge as the creeping debt crisis fuels buyer mistrust, sends home prices plummeting and threatens to infect other sectors.

Official figures released Thursday showed that prices of new homes fell in September in 54 out of 70 benchmark cities compared to the previous month.

Year-on-year, prices were lower in 45 out of the 70 surveyed cities, despite a slew of official measures this year to shore up the ailing market.

China's economy grew a forecast-beating 4.9 percent in the third quarter, official data showed Wednesday.

The expansion adds to a series of broadly positive recent readings, indicating a period of stability after months of weakness following the abolition of strict zero-Covid health curbs.


Artificial Intelligence Analysis

Summary:

Country Garden, one of Chinas biggest developers, has racked up debts estimated at

  • 1.43 trillion yuan and was due Wednesday to repay $15.4 million in interest. Unverified reports in Chinese financial media this week claimed the companys founder Yang Guoqiang and chairwoman Yang Huiyan had left the country, but the firm has denied the speculation. Multiple news outlets have reported that Country Garden has missed the deadline and is at risk of default. Economic, Environmental, and Safety Implications:

    The immediate economic implications of this news are dire for Country Garden, as they are at risk of default if they do not repay the interest owed. This could lead to further financial instability for the company, and could also lead to a ripple effect of economic instability in the property industry in China. Long-term economic implications are uncertain, as this will depend on the ability of the company to honor its debt commitments. In terms of safety, there is a possibility of job losses for employees, as well as a decrease in the quality of housing projects.Geopolitical and Societal Impacts:

    The news of Country Gardens financial instability could have a geopolitical impact as increased economic instability could lead to a decrease in investor and consumer confidence in the Chinese property sector. It could also have an impact on the countrys overall economic performance, as the property industry is a large contributor to the national economy. On the societal level, this news could create increased anxiety among investors and employees alike. It could also lead to a decrease in the quality of housing projects, which would have a direct effect on the people living in them.

    Conclusion

    and Implications:

    The news of Country Gardens financial instability has immediate and potential long-term implications for the company, the Chinese property industry, and the Chinese economy as a whole. This could lead to job losses, decreased investor and consumer confidence, and a decrease in the quality of housing projects. It is important to note that these implications are still uncertain, and further investigation is necessary to determine the future outcomes of this news.

    Investigative Questions:

    • What measures is Country Garden taking to address their debt obligations?
    • What is the extent of the risk of default for Country Garden?
    • What are the potential long-term economic, environmental, and safety implications of this news?
    • How will this news affect future investor and consumer confidence in the Chinese property sector?

      Comparison to Star Trek:

      This situation is similar to the episode of Star Trek:

      The Next Generation, The Price, where the Federation and the Ferengi are competing to acquire valuable rights to an unexplored star system. Both sides are vying for a valuable resource, and the stakes are high as a potential default could have dire consequences for both sides. Just as in this situation, the outcome is uncertain and the implications could be far-reaching.

      This AI report is generated by a sophisticated prompt to a ChatGPT API. Our editors clean text for presentation, but preserve AI thought for our collective observation. Please comment and ask questions about AI use by Spacedaily. We appreciate your support and contribution to better trade news.


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