Evergrande resumes work on 10 major projects after narrowly avoiding default

Evergrande’s fall could trigger financial crisis in China and spill through into global markets

File photo: China’s indebted property developer Evergrande has liabilities worth 1.97 trillion yuan (around £220bn) (AP)

Indebted Chinese property developer Evergrande has resumed work on more than 10 projects across six cities, in an attempt to portray stability just days after it staved off immediate collapse over defaulting payments.

In a statement on Chinese social media platform WeChat, Evergrande posted pictures of buildings and workers at construction sites in Shenzhen, Dongguan, Jiangmen, Shanwei, Zhuhai, and Zhongshan, reported the South China Morning Post.

The group, which has liabilities worth 1.97 trillion yuan (around £220bn), said it would ensure the completion and delivery of the buildings and “make an all-out effort to comply with the government’s requirements”. The company added that the push to finish the projects will boost market confidence.

The announcement came just days after Evergrande chairman Xu Jiayin said on Friday that it was only through building and delivering projects that the company can come out of its debt problems, reported Chinese state media Global Times.

In addition, Mr Xu announced a slew of measures, including a transition from property toward new-energy vehicles within 10 years, for the company to rescue itself. There are also plans to fully implement property sales, while substantially downsizing its real estate development and construction.

The real estate giant’s shares slumped by 14 per cent on the Hong Kong Stock Exchange last week before it managed to stave off immediate collapse by paying interests owed to an offshore bond right before the deadline.

Evergrande had failed to pay interest payments of two US dollar-dominated offshore bonds. While it paid the interest for one bond just before the deadline, it has a grace period for the other. After that, they will be considered to have defaulted.

In a short-term relief to investors, Evergrande managed to settle dues of one domestic bond last month. However, the company has more interest-payment related deadlines to meet by the end of the year.

The real estate sector contributes one-fifth to China’s Gross Domestic Product. Evergrande’s total obligations amount to two per cent of China’s GDP. Chinese authorities have said that the housing market remains “overall controllable” reported Global Times.

The fears of Evergrande formally entering into a formal default have worried investors around the world as the company’s fall could trigger a financial crisis in China and spill through into the global markets.