The real estate company Evergrande has consistently borrowed billions for its numerous projects to buy building land, develop high-rise buildings – and sell the apartments to the Chinese middle class before the groundbreaking ceremony. This system has long fueled China’s economy, but it could now collapse as Evergrande can no longer service its loans. The central question now is whether the Chinese state will save the country’s second largest real estate company – or risk bankruptcy. There are already comparisons to the case of the US investment bank Lehman Brothers, which sparked a global financial crisis in 2008.
What would be the realistic effects of bankruptcy on China’s economy, the world and your money? Handelsblatt China correspondent Dana Heide explains why there is little reason to panic and what investors should pay attention to now.
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