China Evergrande: Judge orders the dissolution of the heavily indebted company - financial expert warns of effects on Chinese economy and banks.

China Evergrande: Judge orders the dissolution of the heavily indebted company - financial expert warns of effects on Chinese economy and banks.

Chinese real estate group China Evergrande is on the verge of being dissolved after Hong Kong judge Linda Chan approved the move. This came about due to the group's high debts, the creditors were no longer willing to agree to the debts of 23 billion US dollars negotiated in the proceedings and thus the decision was made to dissolve the company. This led to a drastic drop in the company's share price and trading was halted for the time being. The effects of a possible liquidation of the group could have a major impact on the Chinese real estate market and the financial industry.

According to a report from www.finanzen.net, the Chinese real estate crisis is concentrated in China Evergrande. This crisis could cause ripple effects and further weaken confidence in the Chinese real estate market. Banks and companies are also directly affected by the real estate crisis, as many Chinese banks have unpaid debts tied to real estate or local government bonds. Furthermore, many companies have liquidity problems due to falling property values. The liquidation of the group could have a significant impact on the markets that the Chinese government recently wanted to help get back on their feet and further undermine confidence in the real estate market.

China Evergrande's creditors who operate abroad may have poor prospects of getting much of their money back. They could possibly sue an insolvency administrator, or a “white knight” would have to emerge, i.e. an investor with the necessary money to restructure the debt. In addition, the Chinese economy could suffer greatly from the crisis, as the real estate sector accounts for a large share of China's economic output. The industry has also been an important economic driver and a contact point for university graduates looking for work.

Despite these effects and the threat of dissolution of China Evergrande, China scientist and economist Markus Taube sees the crisis as manageable for the Chinese government. He emphasizes that much of the group's debt lies with domestic creditors and is not placed abroad, which makes the situation less explosive. In addition, the Chinese economy is state-controlled and the government has set up clear hierarchies as to which debts are serviced first, which could mitigate the effects of the crisis.

Overall, it can be assumed that the dissolution of China Evergrande will have a significant impact on the Chinese real estate market and the financial industry, but China's state control could help to manage the crisis and limit its international impact.