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Having read the article but not heard of Evergrande prior to this, what are the implications of this outside of China? The article mentions that the company fil

Having read the article but not heard of Evergrande prior to this, what are the implications of this outside of China? The article mentions that the company filed for bankruptcy in the US, but not what US operations/developments they had.

uLogMicheal 3y ago
It's more a question of, which hedge funds over-invested in Evergrande and similar real estate over the years as development was shifted to China?
throwaway290 3y ago
If only hedge funds. Big pension funds, universities etc are throwing millions (billions?) of private/taxpayer money into China in recent years. A housing market collapse would not be good news for any of them...
bobthepanda 3y ago
A lot of the loans they took out were in dollars, so somebody abroad is now out a bunch of dollars.
csomar 3y ago
They have $340bn of debt; even if they default on the whole amount, it's only 10% of China currency reserves. The problem, however, is not the nominal amount but how the company network is inter-connected with other companies (either abroad or locally). This amount, albeit not colossal (by China relative size) could trigger effects in other companies that will lead to their failure. This will go on until it becomes a full international crisis. Of course, it could mean that just some rich intercontinental people have lost money on some Chinese developer bond. The thing is, no one knows. Not the leaders of the CCP nor the US do have insights whether this can go somewhere to just stop here.
- slushh 3y ago
  Would it be worthwhile to create the insights? E.g. if there were a global registry of credit dependencies and ownership, at least for system relevant companies, we should know what is going to happen. But what is the worst that could happen? If companies fold, ownership will be transferred. As long as the companies are profitable, their business will continue.
  - riffraff 3y ago
    If the assets are worth 10 but the debt is 100, creditors will not have anything of value transferred, and will have to write down a loss. This could be a small impact or a big one. If you are a person who was relying on those assets for income for your retirement this might mean you no longer have enough to live by. If you are a company you might in turn be forced to fold. If you're a stablecoin that bought evergrande bonds you might be forced to show you have no baking of your emissions..
  - csomar 3y ago
    That will mean companies won't have any privacy at all (all info will need to be public) and essentially centralize them into a single "massive" world company. It didn't work back then (it's similar to communism in that sense) and I don't think it'll work now (it's every bureaucrat wet dream).
    - slushh 3y ago
      How does public knowledge centralize the control of the companies? Owners would still be in control and there still would be laws prohibiting collusion between companies.
- SomeoneFromCA 3y ago
  340bn is the official account. the true number is unknown. And there are millions of other smaller developers who is indebted too.
  - matwood 3y ago
    > 340bn is the official account. the true number is unknown. China is very good at controlling the real numbers that come out. Something like Evergrande failing can't be hidden, and could be the tip of the iceberg of much bigger issues coming to light.
cjs_ac 3y ago
This will cause Australia's first recession in over thirty years. Chinese steel is made from Australian iron ore, which is Australia's biggest export. At the start of the Global Financial Crisis, the Chinese government stimulated the domestic housing market, which was the start of this bubble, but the demand for steel was enough to ensure that Australia suffered no economic downturn at all. All that's about to come crashing down.
- oblio 3y ago
  Ouch, that's going to hurt: https://commons.wikimedia.org/wiki/File:Australia_Product_Exports_(2019).svg https://commons.wikimedia.org/wiki/File:Australia_Product_Ex...
  - MrFoof 3y ago
    Value of iron and coal for Australian exports in 2021 was even higher than in 2019. Iron at $118B, coal at $54.3B, or $172.3B/343B (50.2%). That’s definitely going to hurt.
starfallg 3y ago
Those were financial operations. They were selling bonds outside China. The treatment of stakeholders have also been different inside and outside of China. The assumption based on the experience so far is that inevitably overseas investors, such as US based entities, will lose out more. Chinese firms have been raising money in overseas markets and has been exporting risk in this way, the issue is how China's government will handle this against the opaque corporate structure behind these financial instruments sold overseas.

uLogMicheal 3y ago

It's more a question of, which hedge funds over-invested in Evergrande and similar real estate over the years as development was shifted to China?

throwaway290 3y ago

If only hedge funds. Big pension funds, universities etc are throwing millions (billions?) of private/taxpayer money into China in recent years. A housing market collapse would not be good news for any of them...

bobthepanda 3y ago

A lot of the loans they took out were in dollars, so somebody abroad is now out a bunch of dollars.

csomar 3y ago

They have $340bn of debt; even if they default on the whole amount, it's only 10% of China currency reserves. The problem, however, is not the nominal amount but how the company network is inter-connected with other companies (either abroad or locally). This amount, albeit not colossal (by China relative size) could trigger effects in other companies that will lead to their failure. This will go on until it becomes a full international crisis. Of course, it could mean that just some rich intercontinental people have lost money on some Chinese developer bond. The thing is, no one knows. Not the leaders of the CCP nor the US do have insights whether this can go somewhere to just stop here.

slushh 3y ago
Would it be worthwhile to create the insights? E.g. if there were a global registry of credit dependencies and ownership, at least for system relevant companies, we should know what is going to happen. But what is the worst that could happen? If companies fold, ownership will be transferred. As long as the companies are profitable, their business will continue.
- riffraff 3y ago
  If the assets are worth 10 but the debt is 100, creditors will not have anything of value transferred, and will have to write down a loss. This could be a small impact or a big one. If you are a person who was relying on those assets for income for your retirement this might mean you no longer have enough to live by. If you are a company you might in turn be forced to fold. If you're a stablecoin that bought evergrande bonds you might be forced to show you have no baking of your emissions..
- csomar 3y ago
  That will mean companies won't have any privacy at all (all info will need to be public) and essentially centralize them into a single "massive" world company. It didn't work back then (it's similar to communism in that sense) and I don't think it'll work now (it's every bureaucrat wet dream).
  - slushh 3y ago
    How does public knowledge centralize the control of the companies? Owners would still be in control and there still would be laws prohibiting collusion between companies.
SomeoneFromCA 3y ago
340bn is the official account. the true number is unknown. And there are millions of other smaller developers who is indebted too.
- matwood 3y ago
  > 340bn is the official account. the true number is unknown. China is very good at controlling the real numbers that come out. Something like Evergrande failing can't be hidden, and could be the tip of the iceberg of much bigger issues coming to light.

cjs_ac 3y ago

This will cause Australia's first recession in over thirty years. Chinese steel is made from Australian iron ore, which is Australia's biggest export. At the start of the Global Financial Crisis, the Chinese government stimulated the domestic housing market, which was the start of this bubble, but the demand for steel was enough to ensure that Australia suffered no economic downturn at all. All that's about to come crashing down.

oblio 3y ago
Ouch, that's going to hurt: https://commons.wikimedia.org/wiki/File:Australia_Product_Exports_(2019).svg https://commons.wikimedia.org/wiki/File:Australia_Product_Ex...
- MrFoof 3y ago
  Value of iron and coal for Australian exports in 2021 was even higher than in 2019. Iron at $118B, coal at $54.3B, or $172.3B/343B (50.2%). That’s definitely going to hurt.

starfallg 3y ago

Those were financial operations. They were selling bonds outside China. The treatment of stakeholders have also been different inside and outside of China. The assumption based on the experience so far is that inevitably overseas investors, such as US based entities, will lose out more. Chinese firms have been raising money in overseas markets and has been exporting risk in this way, the issue is how China's government will handle this against the opaque corporate structure behind these financial instruments sold overseas.