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— Financelot (@FinanceLancelot) August 17, 2023
Country Garden collapse sparks contagion fears as China economy tanks
China’s economy is tanking. Investors are running scared. Consumers are stashing their cash. And everybody’s afraid of what Chairman Xi Jinping’s next arbitrary reaction will be.
Country Garden – the country’s last surviving mega property developer – is in trouble.
Two years after the collapse of its competitor Evergrande, it failed to raise enough cash on Monday to meet scheduled bond repayments.
Only a 30-day grace period remains between solvency and default.
Now, fears of economic “contagion” – where one major failure triggers a broader collapse – are surging.
Already, state-controlled developer Sino-Ocean has missed $A32.5 million in interest payments. And major Chinese “shadow bank” Zhongrong International Trust Co has failed to meet repayment obligations.
And this is the perfect illustration (once again) of the dangers of a global economy. In the past, if Bob’s Bank defaulted for some reason, Bill’s Bank down the street was unbothered, and its customers could go on as normal. Now, it’s a big house of cards, and when one blows the who shebang heads into the dust.