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China’s Property Developer Country Garden Forecasts US$7.6Bn Loss
Country Garden, one of China’s largest property developers, has warned that the first six months of the year might result in a loss of up to $7.6 billion. The announcement is the latest indication of the world’s second largest economy’s significant problems.
China fell into deflation for the first time in more than two years, according to the BBC. Exports have also plummeted, and youth unemployment is at an all-time high. Country Garden Holdings shares were down more than 5% in Hong Kong trade on Friday afternoon.
Country Garden “expects to record a net loss ranging from approximately RMB45 billion to RMB55 billion for the six months ended 30 June 2023,” according to a Hong Kong Stock Exchange release.
The anticipated deficit contrasts to a $265 million profit at the same time previous year.
The company also announced the formation of a special task force, led by its chairman Yang Huiyan, to discover measures to turn the business around. Moody’s lowered the company’s rating earlier on Thursday, citing “heightened liquidity and refinancing risks.”
It came as China faced a slew of economic hurdles, raising concerns about the pace of its post-pandemic recovery.
Official numbers released earlier this week showed that the country’s exports plummeted by a larger-than-expected 14.5% in July compared to the previous year, while imports decreased by 12.4%.
Youth unemployment is also at an all-time high, with a record 11.58 million university graduates projected to enter the labour force this year.
On Thursday, US Vice President Joe Biden described China’s deepening economic problems as a “ticking time bomb.”
Mr. Biden recently stated that “China is in trouble” during a fundraising event in the western state of Utah, citing the country’s high unemployment and ageing workforce.
China is also dealing with increasing local government debt and housing market issues. Evergrande, previously China’s largest real estate firm, revealed this month that it will lose $81.1 billion in 2021 and 2022.
It came as the company, which went bankrupt in late-2021, declared its long-overdue earnings to stockholders. Evergrande is reportedly in debt to the tune of $US300 billion.
The massive losses demonstrate how profoundly the developer has been shaken in recent years by China’s housing market crisis.
Problems in China’s property sector, which covers everything from home construction to firms producing white goods for them, can have a significant influence on the country because it accounts for around one-third of the economy.
Country Garden is a real estate development firm that is one of China’s largest and most well-known property developers. Yang Guoqiang created it in 1992, and its headquarters are in Foshan, Guangdong Province, China. Country Garden has evolved swiftly and expanded its operations both within China and worldwide throughout the years.
Country Garden predominantly develops residential property, such as housing complexes, townships and apartment buildings. The corporation is well-known for constructing large-scale master-planned communities, which frequently contain a variety of amenities such as parks, schools, shopping malls, and recreational facilities.
The company’s “park city” idea, which attempts to create urban environments that are harmonious with nature by including green areas and parks into their developments, is one of its distinguishing qualities.
Country Garden’s success is due to aggressive expansion methods and clever marketing techniques. It is a component of the Hang Seng Index, which is based on the Hong Kong Stock Exchange. Yang Guoqiang, the company’s creator, has become one of China’s wealthiest men as a result of the company’s success.
