As China Evergrande's Debt Crisis Deepens, Unpaid Small Business Owners Speak of Despair

Wu Lei says his small construction company in central China has accepted commercial paper from property developer Evergrande as payment for two years but with that paper's value now in doubt, his firm is on the verge of collapse.

China Evergrande Group, saddled with more than $300 billion in total liabilities equivalent to 2 percent of China's GDP, is in the throes of a liquidity crisis that has it scrambling to raise funds to pay its many lenders and suppliers.

The paper promises contractors and suppliers payment on a future fixed date, usually within one year.

Evergrande says it is working hard to repay investors in its wealth management products and is in talks with banks to roll over loans, but has not mentioned smaller suppliers and contractors.

It's not clear just how much commercial paper Evergrande as a group has issued, but its flagship unit Hengda Real Estate Group Co Ltd disclosed some $32 billion worth as of end-2020.

Despite its massive debt load, Evergrande's name had been held in high regard in ordinary business circles until late last year and its commercial paper was even traded in industries not related to construction.

An owner of a small marketing and consultancy business from one of the poorest counties in Guizhou province said he had accepted Evergrande commercial paper from a client and was waiting on 1.5 million yuan in payment that was now two months overdue.

https://www.theepochtimes.com/as-china-evergrandes-debt-crisis-deepens-unpaid-small-business-owners-speak-of-despair_4001386.html