The Chinese economy is not running any significant risks for the time being due to the crisis at real estate group Evergrande.
According to the International Monetary Fund (IMF), President Xi Jinping’s government has mitigated the dangers so that the Chinese economy is not affected by the impending collapse of the construction developer.
Specifically for the Chinese real estate sector, the risks are greater, says the IMF. It was previously announced that the payment problems are not limited to the large Evergrande. Other companies are also struggling with high debt and collapsed revenues since Evergrande can no longer pay its suppliers. According to the IMF, Beijing would do well to help reduce debt in the sector. It just shouldn’t be too fast or too slow.
The Chinese central bank has previously spoken reassuringly about the crisis situation in the real estate sector. Governor Yi Gang stated that defaults due to “mismanagement” by some companies pose a challenge to the Chinese economy. Still, authorities will be careful not to endanger the entire financial system.
The growth of the Chinese economy this year is slightly lower than previously expected at 8 percent, the IMF recently reported. In addition to corona-related influences, tensions in the real estate sector have also led to that adjustment.