Fortune Global 500 company in China turns to bankruptcy

One of the largest property developers might fall into real trouble. China’s real estate giant Evergrande group is on verge of collapse. Many financial analysts believe the current Evergrande crisis as Lehman Brothers 2.o in 2008. The group has more than 1300 development projects in 300 cities across mainland China. More than 200K people are working in the group. Evergrande, the biggest Chinese real estate developer, is staring at bankruptcy. The company owes more than $300 billion debts to its creditors. Evergrande management has admitted the financial crisis. Evergrande group ranked 122 in the Global 500 list.

That made people protest in front of all corporate offices of Evergrande. There are nearly 800 projects remaining unfinished and more than 1 million Chinese people are waiting to shift to new homes. The company also made diversified investments in Electric vehicles, Theme Parks and Sports but none of them became profitable. The company made finance for all these projects by borrowing the money. It has accumulated more than $300 billion in debt. The share price plummeted by 80% which is a sharp decrease since 2021. Evergrande’s market value has dropped from $24billion to $5 billion. Every year the company builds 600K homes in China. For completing them Evergrande brought money from banks.

The company hired financial advisors to suggest raising money by selling assets which have not worked out. China’s Evergrande moment resembles America’s Lehman Brothers collapse that owes more than #600 billion. Lehman collapse led to the global financial crisis of 2008. The U.S. government stepped into the crisis and saved the banks. If the Chinese government has not involved bailing out Evergrande, it might turn into a global crisis. But with the Chinese government's recent crackdowns on Tech companies in the name of “common prosperity”, no one can expect positive signals from the Chinese government. The Chinese economic situation is not as good as everyone thinks. More than 200K companies have declared bankruptcy in 2020. Like the coronavirus that spread to the world after it’s eruption in 2019, will the Evergrande crisis lead to a global financial crisis?