Evergrande issue will not have big impact on the reputation of Chinese enterprises: official
Published: Oct 22, 2021 12:43 AM
Photo: VCG

Photo: VCG

The problem of China Evergrande Group only belongs to the company and will not have a big impact on the reputation of the industry or Chinese enterprises, an official from China Banking and Insurance Regulatory Commission said. 

Liu Zhongrui, an official from the regulator, said the key to the credibility of Chinese-funded enterprises lies in the stability and improvement of China's macro economy, which has laid the foundation for the long-term stable development of real estate enterprises.

Regarding the banking industry's risk of exposure to Evergrande, Liu said that financial liabilities accounted for less than one-third of its total debt and overall risk exposure is not large. 

In addition, Evergrande's liabilities are relatively dispersed among various banks. The overall risk exposure is not large for a single bank and "the overall risk is controllable," Liu said. 

It is another fresh reassurance after several departments have expressed similar voices on the Evergrande issue.

Risks in China's housing market remain overall controllable despite individual problems that have arisen, Vice Premier Liu He said on Wednesday at the annual Financial Street Forum held in Beijing.

Yi Gang, Governor of the People's Bank of China (PBC), the country's central bank, also mentioned in the event that the major risks related to Evergrande are defaults on debts as they fall due, the shutdown of some of its construction sites, and uncertainty facing the on-time delivery of presold homes, adding that the Evergrande risk is specific.

China's central bank said on Friday that the spillover effects of China Evergrande Group's liquidity crisis are controllable. This was the first public statement since the company was summoned by the regulator in August.

The crisis was caused by poor management but financial sector debts only accounts for one third of the total debt, Zou Lan, head of Financial Markets Division at the PBC, said at a briefing.