While Xi Jinping is yet to comment on the uncertainty surrounding the market, one of its largest companies, China Evergrande, faces the potential of defaulting on its vast debt payments. Not only does the company face the prospect of defaulting on its $305billion (£221billion) but it is yet to complete 1.6 million projects across the country. The country’s second-largest property developer also reported a 97 percent drop in its sales in comparison to a year ago.
Despite the chaos surrounding the company, Evergrande told employers on its WeChat page: “All employees of the group swear to ensure the construction of the project with the greatest determination and strength, and complete the delivery of the real estate with the highest quality and quantity.”
While the company has attempted to stay out of the headlines and attempt to rescue its dire financial situation, employees have now begun to suffer from its economic difficulties.
Michael Yang, an Evergrande salesperson in the southern city of Chongqing, revealed his pay has been decimated due to the current situation.
Speaking to the New York Times, he said his salary has been cut from $3,900 (£2,876) a month to $280 (£206).
He has also begun a year of an enforced sabbatical by the company from the beginning of this month.
He told the publication: “It’s not enough for me in Chongqing, for sure.
“It suddenly disrupted my life plan.
“I didn’t expect it to come so quickly.”
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It has faced several other deadlines before managing to pay off debts at the last minute.
While it has managed to survive so far, experts claim the company will default on its payments.
Matthew Chow, a China property analyst and director at S&P Global Ratings said: “The fundamental situation for Evergrande hasn’t really changed.
“We remain sure that default is almost a certainty.”
If the company were to default on its payment, it would have serious consequences for China’s economy as the property market accounts for 29 percent of the country’s GDP.
China’s property market is valued at $55trillion (£40trillion) in some estimates which is four times larger than the country’s GDP.
If Evergrande were to go into financial ruin and spark the collapse of the housing market, it is thought it could wipe $1trillion (£737billion) off the world’s growth rate.
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