Beijing:
The billionaire boss of beleaguered Chinese property developer China Evergrande is being held by police, a report said on Wednesday, as the debt-ridden company faces serious financial problems.
Xu Jiayin, known in Cantonese as Hui Ka Yan, was taken by authorities earlier this month, according to anonymous sources quoted by Bloomberg News.
He is being held under “residential supervision,” the report said, which does not mean he has been arrested or charged with a crime.
Calls from AFP to Evergrande offices in Hong Kong and mainland China went unanswered and the company did not respond to a request for comment.
Evergrande’s massive debt burden has helped deepen the country’s real estate crisis, raising fears of a global spillover.
The company’s real estate division missed a key debt payment this week, and Chinese financial website Caixin reported that former company executives had been arrested.
The 65-year-old chairman was once China’s richest man, with a penchant for luxury labels and yachts, and a knack for praising the Communist Party that steered the economy into a housing boom.
According to the Bloomberg Billionaires Index, Xu’s net worth is now estimated at $1.8 billion (up from $42 billion in 2017).
On Sunday evening, Evergrande announced it could not issue new debt as its subsidiary Hengda Real Estate Group was under investigation.
That came two days after the company said there would be no meetings on a major restructuring plan this week, adding that it was “necessary to reassess the terms of the plan to meet the “objective situation and the demand of the creditors”.
China’s real estate sector, which together with the construction sector accounts for about a quarter of the country’s gross domestic product, is a key pillar of the country’s growth and has experienced a dizzying boom in recent decades.
But the enormous debt burden accumulated by the sector’s biggest players – Evergrande estimated the debt at $328 billion at the end of June – has been seen by Beijing in recent years as an unacceptable risk to China’s financial system and overall economic health.
Authorities have gradually tightened developers’ access to credit since 2020, and a wave of defaults followed, most notably from Evergrande.
Earlier this month, authorities in the southern city of Shenzhen said they had arrested several Evergrande employees, also calling on the public to report cases of suspected fraud.
Another Chinese real estate giant, Country Garden, has narrowly avoided bankruptcy in recent months after reporting record losses and debts of more than $150 billion.
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