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Le Monde
Le Monde
17 Aug 2023


Country Garden's headquarters in Foshan, in China's southern Guangdong province, on June 15, 2023.

Until a few months ago, Country Garden was seen as the strongest link in the Chinese real estate chain, at a time when Evergrande and dozens of other property developers were struggling to pay their debts. But the firm is now "facing the greatest difficulties since our establishment," admitted the group's current boss, Yang Huiyan. A week after missing two repayment deadlines on dollar-denominated debts, the company suspended trading of a dozen of its onshore bonds on Monday, August 14, as they were now considered rotten by the rating agencies. Country Garden was punished immediately when its share price on the Hong Kong Stock Exchange plummeted by 18%. The collapse of China's leading homebuilder in 2022 is likely to further undermine household confidence in this sector, which accounts for around 25% of the country's gross domestic product.

Read more Article réservé à nos abonnés Real estate is the Chinese economy's weak link

These defaults risk reinforcing the negative spiral in which the construction economy is currently trapped. In July, year-on-year sales recorded by China's top 100 property developers plummeted by 33%, while real estate investment fell by 8.5%, according to the National Bureau of Statistics. With no buyers, private developers are running out of cash and can no longer repay their debts.

Evergrande, which had the highest level of debts, has been insolvent since 2021, facing the equivalent of €310 billion in debts and unpaid bills. Country Garden, with debts of €180 billion, had until now weathered the storm, although the company's boss had to put her hands in her own pocket in late 2022 to lend the group funds. But the problems faced by the sector have gone from bad to worse. Despite the lifting of the zero-Covid policy in late December 2022, the long-awaited recovery has failed to materialize. On the contrary, after a brief upturn in the first quarter, real estate sales have ultimately fallen by 4.7% since the start of the year.

Founded in 1992 in Foshan, near Guangzhou, Country Garden, or Bi Guiyuan in Mandarin, has benefited from the liberalization of the property market and the country's rapid urbanization. Its founder, Yang Guoqiang, a farmer and construction worker, became one of China's many real estate billionaires. Today, his daughter Yang Huiyan heads up the company, which had 70,000 employees by the end of 2022. Long considered Asia's richest woman after inheriting her father's fortune in 2007, she now faces the challenge of reassuring investors that her group is solvent, and has 30 days in which to repay missed payments.

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