China’s Evergrande Group Blamed for Inflating Revenue by $78 Billion in Two Years, Faces Major Financial Crisis and Regulatory Actions
Evergrande Group, the main company behind China’s real estate crisis, has been found to have inflated its revenue by over $78 billion in just two years, according to China’s top securities regulator, the China Securities Regulatory Commission (CSRC). The staggering amount includes $29.7 billion in 2019 and $48 billion in 2020, achieved through the improper recognition of sales in advance.
The founder of Evergrande, Hui Ka Yan, now faces the possibility of being banned from China’s financial markets after the company was fined a massive $583.5 million by the regulator. The blame for the financial misconduct has largely been placed on Hui, who allegedly instructed staff to falsify the company’s data in both 2019 and 2020. In addition to the fine imposed on the company, Hui himself was fined $6.5 million and was previously under police surveillance for “illegal crimes.”
Once considered among Asia’s richest tycoons, with a net worth of $42 billion at his peak in 2017, Hui has seen his wealth dwindle to approximately $1 billion as a result of the company’s financial troubles. Evergrande, burdened with over $300 billion in debt, is now one of the key players struggling in China’s real estate crisis.
The impact of the real estate market woes has been felt throughout the Chinese economy, with the construction industry experiencing significant financial strain since 2021. Measures implemented by authorities to restrict borrowing by large companies have led to a 9% decline in property investment in January and February compared to the previous year. New construction has also plummeted by 30%, marking the sharpest drop in over a year.
As Evergrande and other companies grapple with mounting debt and regulatory scrutiny, the future of China’s real estate market remains uncertain. Liquidators are exploring various restructuring strategies, such as asset seizure and sale, in an effort to repay outstanding debts and stabilize the industry.
