Construction lion Yang Huiyan
The once-richest woman in Asia lost $28 billion in the crisis
Yang Huiyan at the zenith of power and wealth
© HPIC Ji Guoqiang / Picture Alliance
China’s real estate bubble bursts – and threatens to engulf the next company. Real estate giant Country Garden faces bankruptcy. Owner Yang Huiyan has lost over 84 percent of her wealth in two years. In an emergency, she is said to have obtained EU citizenship.
Yang Huiyan was considered the richest woman in Asia. She was born wealthy as the heiress to real estate giant Country Garden and added to that wealth. But in just two years, it lost $28.6 billion. Or 84 percent of their net worth, according to the Bloomberg Billionaires Index.
She has lost more than any other billionaire in the world in the last two years. Her current net worth is “only” $5.5 billion. According to the index, she lost $490 million on Tuesday alone. And now there is a risk of falling into nothingness, since the construction company Country Garden is threatened with insolvency. Earlier in the week, Country Garden failed to make interest payments on two bonds. Country Garden still has 30 days to pay out the money, after which the company will be declared insolvent.
Real estate giant Evergrande went under two years ago. In the times of the construction boom, these companies accumulated unrestrained debts. In the current market environment, they cannot refinance these burdens. So they get into an acute liquidity crisis.
Overheated construction industry
Country Garden’s business model was simple: The company built apartment buildings for the country’s fast-growing middle class. But in addition to its own problems such as over-indebtedness, the construction industry lost the goodwill of politicians. Super-rich and flaunted wealth clashed with Xi Jinping’s guidelines.
He evokes the fight against poverty and a more equal distribution of wealth. Its key word is “common prosperity”. The construction boom provided much-needed living space, but it also led to a speculative bubble. Apartments became so expensive that one could only buy them with the hope of further speculative gains.
unwillingness of the political leadership
Xi Jinping has targeted this real estate bubble. His mantra is “Houses are for living in, not for speculating”. This is well received by the population because the slogan suggests that living space should become affordable again. For a real estate tycoon like Yang Huiyan, he’s a blatant threat.
Difficult companies in China cannot hope to be “rescued” like banks in the EU. An orderly collapse and continuation in new structures would be the most elegant solution for the party. In August 2022, Yang Huiyan lost the title of Asia’s richest woman to Savitri Jindal. She is the wealthiest woman in India. Yang Huiyan is said to have acquired Cypriot citizenship years ago. It can be assumed that she also deposited a nest egg there.
Sources: Bloomberg, Augsburg General