The Chinese real estate group Country Garden has warned of a default on bonds in view of losses in the billions. Concerns about China’s economy are growing.
After losing billions, the struggling Chinese real estate group Country Garden is warning of a default on some bonds. “Should the financial performance of the group continue to deteriorate in the future, the group may not be able to meet the financial covenants of these loans,” the group said in Hong Kong late Wednesday evening.
This could lead to a default of these bonds. There is also a risk that some of the company’s other bonds could be affected. The group is looking for solutions to pay off the remaining foreign debt, which is due by the end of June next year. Loss was 48.9 billion yuan in the first half
production activity shrinking for the fifth straight month
Meanwhile, there are increasing warning signals that the situation in China’s economy as a whole is tense. According to official data, economic activity in the manufacturing sector has declined for the fifth straight month.
The non-manufacturing sector also continued to lose momentum in August. More stimulus measures may be needed to boost growth, said HSBC Bank’s Frederic Neumann.
Overall, the Chinese economy is not gaining as much momentum as the leadership in Beijing had imagined after the strict corona measures were lifted at the end of last year. China is currently suffering from collapsing foreign demand – the export engine is sputtering. Added to this is high youth unemployment and flagging consumption.
Sentiment in companies further gloomy
The mood in the executive floors of Chinese companies is unchanged. The purchasing managers’ index (PMI) for the manufacturing sector rose to 49.7 points from 49.3 in August, the statistics office announced today.
Economists had expected a small setback. For the fifth month in a row, the important leading indicator remained below the 50 point mark, below which a decline in industrial activity is to be expected.
In addition, the crisis in the real estate sector threatens to affect the entire economy. In addition, there are tensions with the USA, which has imposed technology sanctions on China.