January 31st, 2022
The Evergrande crisis continues.
Yahoo News reports:
The opening last year of the world’s largest artificial resort island, developed by China Evergrande Group for nearly $13 billion, was the realization of the ambitions of founder Hui Ka Yan, who sketched a design for the project himself.
Now Evergrande is in default to global bondholders, the former Communist Party secretary of the small Hainan island city where Ocean Flower Island was built is serving a life sentence for bribery, and officials in Danzhou city have ordered 39 of the project’s towers – roughly 3,900 of the island’s 65,000 homes – to be demolished over environmental and construction violations.
The demolition of part of the 2,000-acre, flower-shaped project would add to the woes of what was once China’s top-selling developer, which is now reeling under more than $300 billion in debt, struggling to revive sales and repay creditors and suppliers.
Government documents related to the project and details provided by two sources with direct knowledge of the island’s development show how the work skirted environmental and zoning regulations during nearly a decade of development, eventually drawing scrutiny from regulatory authorities.
As noted, Hui was Asia’s richest man at one point.
In 2017, Hui was Asia’s richest man. As recently as July 2021, the former steel technician could be found mingling with power brokers in Beijing at a celebration to mark the centenary of the Chinese Communist Party.
Chinese authorities have been scrutinising the firm and Hui’s assets since late last year to determine whether anything was hidden, and the central bank has blamed mismanagement and breakneck expansion for Evergrande’s problems.
As Evergrande, now at the centre of China’s property sector liquidity squeeze, pushed ahead with the resort island, it ran into environmental issues, in particular over land reclamation that damaged the local ecology, the two sources said.
The Evergrande crisis has not only impacted Asia’s former richest man, but it also impacts Hong Kong’s former richest woman.