Secretary of State Antony Blinken urged the Chinese communist regime to “act responsibly” in the face of the looming threat posed to the stock market by the risk of bankruptcy of real estate giant Evergrande.

“China has to make sovereign economic decisions for itself, but we also know that what China does economically is going to have profound ramifications, profound effects, on literally the entire world because all of our economies are so intertwined,” Blinken said in a Sept. 6 interview with Bloomberg. 

He added: “So certainly when it comes to something that could have a major impact on the Chinese economy we look to China to act responsibly and to deal effectively with any challenges.”

Investors fear that Evergrande Group, which has $425 billion of debt, will go bankrupt, although it has not yet gone into receivership, despite having defaulted on obligations worth hundreds of millions of dollars. 

Economists say that if Evergrande defaults, Beijing may avoid a major credit crisis, but it does not want to bail out the company or its creditors, and Blinken is reportedly pushing for the Chinese Communist Party (CCP) to take charge and prevent serious repercussions to the U.S. financial system. 

“Evergrande counts big international companies among its investors, including Allianz, Ashmore and BlackRock. A default is likely to have spillover effects on global markets, where many investors have historically anticipated Chinese government support at times of distress,” noted Financial Times last month. 

The regime would have to consider whether to inject liquidity into the company to rescue it from collapse, with the risk that the same would have to be done to many other companies across the country.

The other alternative is to let Evergrande collapse and let the economy itself make the necessary adjustment to release the misinvested resources, which would be bad news for U.S. investors. 

In fact, the crisis in China’s financial sector is getting worse by the day. Now another major real estate company, Fantasia, was declared in default or near default by Fitch Ratings, S&P Global Ratings and Moody’s Investors Service, according to South China Morning Post. 

Shenzhen-based real estate developer Fantasia failed to repay $205.7 million owed as part of a $500 million financing it took in September 2016.

“The non-payment of Fantasia’s October 2021 U.S. dollar bond triggered events of default on the company’s other U.S. dollar notes, which will become immediately due and payable if the bond trustee or holders of at least 25 per cent in aggregate principal amount of the offshore notes declare so,” explained analysts at Fitch.

Trading in Fantasia shares has been suspended in Hong Kong since Sept. 29 and had already lost a third of its value since July 22.

On the other hand, the situation between the United States and the CCP is becoming increasingly tense given the massive incursions of warplanes over Taiwan’s skies, in what seems to be the prelude to the invasion promised by the communist regime.

In this regard, the CCP-controlled news agency issued hostile warnings to countries wishing to interfere. “Do not continue to play with fire,” the Global Times wrote on Oct. 4.

Once again, the news agency used threats of war as a shield to get nations to stop supporting Taiwan. The same strategy was applied when the United States wanted to investigate the origin of the COVID-19 virus.

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