Country Garden denies founder flees China as default looms

Country Garden denies founder flees China as default looms

Country Garden is one of several Chinese developers struggling under massive debts
Country Garden is one of several Chinese developers struggling under massive debts. Photo: STR / AFP
Source: AFP

Chinese property giant Country Garden denied Thursday its founder and chairwoman had fled the country, as the debt-saddled builder flirts with a default that could send shockwaves through the industry.

One of China's biggest developers, Country Garden has racked up debts estimated at 1.43 trillion yuan ($196 billion) as of the end of 2022.

Unverified reports in Chinese financial media this week claimed founder Yang Guoqiang and his daughter Yang Huiyan -- the company's chairwoman -- had left China.

But the firm quashed the speculation Thursday, saying "the founder... and the group's chair of the board of directors are currently working normally inside the country".

"This rumour was posted with ulterior motives on multiple online platforms, causing a negative impact," the firm said in an online statement.

"We... reserve the right to take legal action over malicious rumours," it added.

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Country Garden denies founder, chairwoman have fled China

Yang Huiyan took over as chair of Country Garden in March after her father stepped down from his position on the board.

But her company is now on the frontlines of China's property crisis that has seen a string of debt-laden builders either defaulting or threatening to do so.

Bloomberg News reported last month that the billionaire boss of beleaguered builder China Evergrande -- which defaulted in 2021 -- was being held by police.

Country Garden was due Wednesday to repay $15.4 million in interest but had not given an official indication of whether it had done so by Thursday.

Sales slump

Multiple news outlets, citing bondholders and anonymous sources, reported that the company had missed the deadline, putting it at risk of default.

Country Garden did not immediately respond to an AFP request seeking confirmation of the missed payment.

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But the firm told Bloomberg on Wednesday that it "expects that it won't be able to meet all of its offshore payment obligations on time".

It blamed its struggles on "a deep correction in China's home market and its subdued sales".

Country Garden had 148 billion yuan in cash as of the end of June but it said it intends to use that to complete unfinished housing projects whose units were sold in advance, a common business model in China's property sector.

The country's real estate industry boasted decades of soaring growth that buoyed thousands of companies and became a major source of employment.

Today, construction and real estate account for around a quarter of gross domestic product.

But authorities are now on edge as the creeping debt crisis fuels buyer mistrust, sends home prices plummeting and threatens to infect other sectors.

Official figures released Thursday showed that prices of new homes fell in September in 54 out of 70 benchmark cities compared to the previous month.

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China says third-quarter economic growth slowed to 4.9%

Year-on-year, prices were lower in 45 out of the 70 surveyed cities, despite a slew of official measures this year to shore up the ailing market.

China's economy grew a forecast-beating 4.9 percent in the third quarter, official data showed Wednesday.

The expansion adds to a series of broadly positive recent readings, indicating a period of stability after months of weakness following the abolition of strict zero-Covid health curbs.

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Source: AFP

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