Following Evergrande, Chinese economy is under threat alongside the real estate companies Fantasia, Scenic Holdings, Modern Land

Beijing: – After Evergrande, China’s leading real estate company, indications are that other big companies also may default in debt repayments. They include Fantasia, Scenic Holdings along Modern Land. It is learned that the company defaulted on payment to the tune of $250 million. Analysts predict that the energy sector crisis and the Coronavirus pandemic’s new outbreak could increase the intensity of jolts in the economy while the real estate sector crisis worsens. International financial institutions have claimed that China’s economic growth rate will have fallen below 5% by next year.

The shares of Evergrande, China’s leading real estate and construction company, have fallen more than 80% over the past year. The company has $305 billion in debt; it is claimed that it will be unable to repay it. The company has defaulted on three successive installments. Following this, the other three leading companies have declared failure to repay loans and interest. These include ‘Fantasia’, ‘Scenic Holdings’ and ‘Modern Land’. Fantasia has defaulted on nearly $310 million in debt and interest. Scenic Holdings and Modern Land have each failed to repay $250 million.

The share of real estate and related sectors in the Chinese economy is nearly 30%. On the other hand, most of the bad loans Chinese banks are also in this sector. In 2021, the Chinese companies’ default in debt and interest repayment is to the tune of $9 billion, of which 34% is from real estate companies. Against this backdrop, international financial institutions have started downgrading credit ratings of the real estate companies, which is believed to have hit more than 30 companies.

China’s economy has been further hit hard due to the action against the education and technology sector, the energy crisis, the recent re-emergence of the Coronavirus epidemic, the hidden debt crisis, and the real estate sector crisis. The campaign launched by the Chinese communist regime against private companies is continuing. IPOs of many companies have been stopped and banks have tightened the rules for loans to these companies. This has had a massive impact on the stock market, reportedly hitting the companies to the tune of nearly $400 billion.

For the past few months, the power crisis that has erupted in various parts of China is still unresolved. China had instructed its energy companies to make fuel available in any which way possible. Along with buying additional electricity from Russia, moves are also being made to buy fuel from US companies. However, despite all these measures, many provinces and cities are facing power shortages.

Information about the hidden debt in the Chinese economy is also coming to the fore. It has been revealed that the debt burden on projects being built by the local administrations in China is getting out of control. According to media reports, the hidden debt is estimated at $8.3 trillion. According to economists at Nomura, the figure is more than 40% of China’s GDP.

Meanwhile, there are new outbreaks of Coronavirus in some provinces of China, and strict restrictions have been imposed in some cities, including the Gansu province. Since the last few months, new outbreaks of Coronavirus have been consistently seen in China. Concerns are being raised that these outbreaks are directly impacting the Chinese economy and will, in turn, impact the global economy.