- Country Garden Predicts $7.6 Billion Loss, Reflecting China’s Economic Challenges
- Moody’s Downgrades Rating as China Faces Economic Problems
- Evergrande’s Massive Losses Highlight China’s Property Market Crisis
Country Garden, one of China’s largest property developers, has predicted a loss of up to $7.6 billion (£6 billion) for the first half of the year.
The announcement is the most recent indication of the significant problems facing the world’s second-largest economy.
This week, official data revealed that China experienced deflation for the first time in over two years.
In addition to a sharp decline in exports, adolescent unemployment has reached an all-time high.
On Friday afternoon in Hong Kong, shares of Country Garden Holdings declined by more than 5 percent.
Country Garden “anticipates a net loss of between RMB45 billion [$6.24 billion; £4.9 billion] and RMB55 billion for the six months ended 30 June 2023,” the company announced to the Hong Kong Stock Exchange.
The anticipated deficit compares to a profit of $265 million at the same time last year.
The company also stated that it has established a special task force, led by its chairman Yang Huiyan, to find methods to turn the company around.
The rating agency Moody’s downgraded the company’s rating earlier on Thursday, citing “increased liquidity and refinancing risks.”
It occurred at a time when China was facing several economic challenges, raising concerns about the speed of its post-pandemic recovery.
In July, the country’s exports fell by a larger-than-anticipated 14.5% compared to the same month the previous year, while imports fell by 12.2%.
Youth unemployment, which is at an all-time high, is also being closely monitored, as a record 11,58 million college graduates are expected to enter the job market this year.
President of the United States Joe Biden stated on Thursday that China’s increasing economic issues make it a “ticking time bomb.”
Mr. Biden stated, “China is in trouble” at a fund-raising event in the western state of Utah, citing its high unemployment rate and an ageing workforce.
The nation is also dealing with soaring local government debt and housing market difficulties.
Evergrande, once China’s largest real estate company, disclosed last month that it lost $81.1bn in 2021 and 2022.
It occurred as the company, which defaulted on its debts in late 2021, reported to investors its long-delayed earnings.
Evergrande has struggled with approximately $300 billion in obligations.
The enormous losses demonstrate how severely the developer was impacted in recent years by China’s property market crisis.
As it accounts for approximately one-third of China’s economy, problems in the property sector – which encompasses everything from home construction to the manufacture of white goods – can have a significant effect on the country.
