Beijing (AFP)
The Chinese central bank on Friday deemed "manageable" the risks posed by the debt of real estate giant Evergrande to the country's financial system.
The biggest promoter of China is dragging a slate estimated at nearly 260 billion euros, which threatens by domino effect the rest of the economy.
The group, which in recent years has embarked on an all-out diversification, has struggled for several weeks to honor its interest payments and deliveries of apartments.
"Overall, the risk of contagion to the financial system is manageable," said central bank official Zou Lan, quoted by local media.
The authorities "urge Evergrande to increase its efforts to sell assets and speed up the resumption of construction sites," the official said at a press briefing.
Recently, several subcontractors and suppliers complained that they were not getting paid.
Some have taken their cases to court, while construction sites have been shut down.
Evergrande "has been very poorly managed", diversifying "blindly", criticized Mr. Zou.
In addition to real estate, the firm has invested in tourism, digital technology, insurance, health ... but also the electric car.
Founded in 2019, Evergrande Auto had the ambition to revolutionize the sector and compete with the American Tesla.
The real estate sector has long been one of the engines of the Chinese economy with the construction of millions of homes.
A frenzy stimulated in particular by the need of most Chinese to access property, an almost obligatory stage of social advancement.
But faced with the swelling of the debt in real estate, the regulators imposed on the sector "three red lines", prudential ratios which aim to reduce the recourse to the borrowing of the promoters.
The most vulnerable have since struggled to keep their activities afloat, while real estate sales and prices have slowed sharply in recent months.
Last month, Evergrande admitted he might not be able to honor all of his commitments, but claimed he was not on the verge of bankruptcy.
© 2021 AFP