The Chinese government has warned local authorities of "the potential storm" if financially troubled real estate group China Evergrande Group were to go bankrupt.

That's what sources say to

The Wall Street Journal



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They are mainly asked to curb protests and only buy land after Evergrande has gone bankrupt.

That suggests that Beijing doesn't want to intervene at Evergrande and keep the debt-laden group afloat.

Local authorities are now talking to state-owned companies and private real estate investors about the possible acquisition of Evergrande's construction projects.

In addition, financial regulators have issued a series of instructions asking the company to focus on selling unfinished projects and repaying investors.

They also ask Evergrande to avoid defaulting on payments and proactively communicate with creditors.

The threat of bankruptcy of Evergrande, which is weighed down by a debt load of 260 billion euros, is keeping investors worldwide under spell.

Growing concerns about the group are leading to a sell-off in Asian markets, highlighting how the crisis is spreading to other assets.

Investors are bracing for a crucial payment deadline on Thursday.

The company has to pay 83.5 million dollars (more than 71 million euros) in interest on a 2 billion dollar bond.

The next payment deadline is a week later.

Failure of the group could trigger the largest debt restructuring in China's history.

It would also be the worst blow to date in a market that has enticed international asset managers with lucrative returns.

This happened at a time when global bond yields were at an all-time low.