China: Behind the collapse of Evergrande real estate empire

That is the opinion of many Chinese analysts. Analysts pointed out that the Chinese government did not hesitate to take action against this businessman regardless of the possibility of affecting the confidence of the private sector.

Last week, in a notice posted on the Hong Kong Stock Exchange (China), China Evergrande Group (Evergrande) said that Mr. Xu was being subjected to "compulsory measures" by the police on suspicion of committing a crime.

Evergrande did not say where Mr. Xu was or what specific measures he was being taken against him. In China's legal system, "compulsory measures" can include temporary detention or formal arrest.

Several top executives of the company were also arrested.

Billionaire Hui Ka-yin in Hong Kong in 2019. Photo: Bloomberg

Evergrande is struggling with debt and Mr. Xu’s detention has cast doubt on its restructuring plans, raising questions about whether the company can weather the crisis.

Evergrande, once China's largest real estate group but now the world's most indebted real estate developer, has filed for bankruptcy protection in the US.

Although experts believe the bankruptcy filing is merely a formality and signals the end of restructuring talks, many in mainland China accuse Mr. Xu of trying to hide assets overseas and avoid paying creditors at home.

One of the most vocal critics was Wang Hongsheng, founder of television producer Skyworth. Wang posted a video on the social media platform WeChat on October 2 accusing Xu of shirking responsibility.

An Evergrande spokesman said the company had no comment on Mr. Wang's video.

China Evergrande Group. Photo: REUTERS

According to Mr. Deng Yuwen, former deputy editor-in-chief of the Research Times - the official newspaper of the Central Party School of the Communist Party of China, Mr. Xu miscalculated that the Chinese government would never let his giant real estate empire go bankrupt or target the super-rich.

"Mr Xu completely underestimated President Xi Jinping's political determination to defuse the domestic property bubble," Deng said. "Beijing certainly wants to shore up private sector confidence now, especially amid a sluggish economy, but it will not be dependent on private capital."

According to Mr. Deng, Beijing is "concerned about potential illegal capital outflows, as this would undermine China's financial stability."

Source: https://nld.com.vn/thoi-su-quoc-te/trung-quoc-dang-sau-su-sup-do-cua-de-che-bat-dong-san-evergrande-20231003165007996.htm