Chinese authorities have intensified their involvement in the ongoing Evergrande crisis by detaining personnel from the property giant’s financial subsidiary. The Shenzhen police disclosed these detentions in a social media statement on September 16th, providing minimal details. Among the detainees, only one individual was partially identified with the surname ‘Du,’ as reported by Bloomberg.
Evergrande is currently navigating what is being termed the largest restructuring in China’s history. However, crucial decisions regarding its offshore debt overhaul have been postponed until October, leaving the entire process shrouded in uncertainty.
The Evergrande crisis holds significant implications for China’s property market and, consequently, the overall growth of the world’s second-largest economy considering how Chinese Authorities have detained personnel.
The detained individuals, according to Bloomberg, are affiliated with Evergrande Financial Wealth Management Co., an entity wholly owned by China Evergrande Group. This subsidiary, established in 2015 and based in Shenzhen, has been under the management of Du Liang. However, it remains unconfirmed whether Du Liang is among those detained.
These detentions occur amidst considerable financial chaos surrounding Evergrande. In 2022, the embattled firm failed to honor payments totaling 40 billion yuan ($5.6 billion) for its wealth management products. This triggered nationwide protests and intensified scrutiny from Beijing, as the company had received funding from over 70,000 investors, including its own employees, according to Bloomberg.
The police have declared that their investigation into Evergrande’s financial arm is still active. They have urged investors to assist in the probe by filing online complaints and providing relevant information.
Furthermore, the Chinese government has assumed control of Evergrande’s insurance division. Evergrande Life Assurance Co. will now be managed by state-supported Hai Gang Life, as announced by the National Administration of Financial Regulation on September 15th.
The ongoing developments in the Evergrande crisis continue to capture the attention of both domestic and international markets, as they await further details and decisions that could significantly impact China’s property sector and its broader economic landscape.