09-22-2021, 01:21 PM
- Evergrande’s debt crisis will slow down China’s economic growth, said Li Daokui, a former advisor to the People’s Bank of China.
- But the crisis will have minimal spillover on the financial system because there aren’t derivative instruments built on Evergrande’s debt, said Li, now a professor at Tsinghua University’s School of Economics and Management.
- Li predicted that in the medium- to long-term, the embattled company will likely be “dissolved” into four main groups.
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Evergrande’s debt crisis will slow down China’s economic growth, but will likely have minimal spillover on the country’s financial system, according to a former advisor to China’s central bank.
Evergrande is the world’s most indebted property developer with total liabilities of around $300 billion. The company has been struggling to pay its suppliers and warned investors it could default on its debts, with one key payment due as soon as this week.
“The impact is on the real economy because with the default of Evergrande, there’ll be [a] slowdown in developments of many projects,” Li Daokui, formerly an advisor to the People’s Bank of China, told CNBC “Squawk Box Asia” on Wednesday.
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