Emulating the turmoil of homebuyers withholding mortgage payments, hundreds of real estate suppliers refuse to repay bank loans due to default. 

On Tuesday, July 19, many contractors to the property industry filed complaints, saying they could not pay their bills as giant developer defaults like Evergrande Group still owe them money. 

The Evergrande situation has rattled global markets and left investors and hundreds of thousands of buyers of unfinished apartments facing uncertainty. Now it’s dragging a countless number of related business partners down. 

According to media statistics, Evergrande owes suppliers as much as $74 billion and about $30 billion in unpaid commercial bills. As a result, some large construction companies are on the brink of bankruptcy.

A group of businesses sent a letter to the developer’s Hubei office, saying, “We decided to stop paying all loans and arrears, and advise our peers to decline any requests to be paid on credit or commercial bill.” The letter added, “Evergrande should be held responsible for any consequence that follows because of the chain reaction of the supply-chain crisis.”

According to Bloomberg, “The development underscores a dilemma for Xi Jinping’s regima as it grapples with who to bail out as the country’s property crisis deepens. Relief for some borrowers could prompt threats of non-payment by a whole host of others. While bending to demands for support could put a strain on state finances, ignoring them might lead to a spiral of defaults as more and more borrowers refuse to meet their obligations.”

Chinese banks sit on $5 trillion of outstanding residential mortgages and around $2 trillion in loans to the country’s beleaguered developers. 

Sign up to receive our latest news!

By submitting this form, I agree to the terms.