Now with the announcements of more failures and defaults, it is apparent that financial problems are deepening and becoming more widespread. Indeed, the news is beginning to resemble the beginnings of America's 2008-09 financial crisis.
The first tentative signs emerged in August when Sunshine 100 China Holdings Ltd. defaulted on some of its dollar-based notes.
A few weeks later, the much more significant Evergrande failed to make an interest payment on a much larger issue of dollar-based debt and announced that it was effectively insolvent.
Credit rating agencies began to downgrade much Chinese corporate debt to levels that point to default, while all eyes turned to Oct. 15, when some $229 million of the Beijing-based Xinyuan Real Estate Company's dollar-denominated debt will come due.
Widespread debt problems of this sort were always a likely outgrowth of China's past breakneck pace of development.
Evergrande used debt to expand from its original base in Guangdong Province to pursue developments all over China, as well as move into other lines of business.
The Fed flooded the financial markets with liquidity at low interest rates so that anyone experiencing problems could readily borrow on easy terms to meet their obligations.
https://www.theepochtimes.com/chinas-debt-problems-continue-to-fester_4039137.html
No comments:
Post a Comment