Crisis in China’s property industry deepens

Bloomberg

Almost a year after China’s property-market debt squeeze sparked the first in a wave of defaults by developers, the industry is fighting for survival.
Home sales continue to plunge and elevated borrowing costs mean offshore refinancing is off the table for many developers. Global agencies are pulling their ratings on property bonds, while a string of auditor resignations is adding to doubts over
financial transparency only weeks before earnings season. An 81% stock plunge in Zhenro Properties Group highlighted the risks of margin calls as companies struggle to repay debt.
Yu Liang, chairman of China Vanke Co — one of the country’s largest developers — urged staff to prepare for a battle that could make or break the firm, according to the South China Morning Post, which cited an internal document from last month. “We are on our last legs, which means there are no other options,” he said.
As the cash crunch for developers worsens, so does the housing slowdown that’s become one of the biggest drags on China’s economy. Attempting to deflate a speculative
market is a risky strategy that could threaten Beijing’s pledge to prioritise economic stability this year.