The descent into hell continues. The Chinese developer Evergrande, with astronomical debt and which has become a symbol in China of the real estate crisis, was fined 532 million euros for infractions, the stock market regulator announced on Friday, May 31.
The setbacks of the group, former number one in real estate in China, have fueled distrust since 2020 in a sector that has long been very lucrative but is now shunned, against a backdrop of economic slowdown and unfinished housing.
“Between 2019 and 2020, Evergrande Real Estate (the group’s real estate subsidiary, Editor’s note) inflated its turnover and profits, which led to a fraudulent issuance of bonds on the stock market,” noted the regulator. Evergrande is therefore fined 4.2 billion yuan, he said in a press release, which is equivalent to 532 million euros.
The group’s founder, Xu Jiayin, faces a penalty of 47 million yuan (6 million euros), the regulator said. According to press reports last year, Xu Jiayin reportedly under house arrest.
The group has never confirmed or denied but recognized that the ex-leader was “the subject of coercive measures due to suspicion of a crime or misdemeanor in violation of the law”, without giving further details on the nature of the facts. reproached. In China, the term “coercive measures” generally refers to a form of deprivation of liberty in order to guarantee the smooth running of criminal proceedings.
The Evergrande group, whose descent into hell regularly makes the headlines, had at the end of June 2023 a colossal balance sheet estimated at 328 billion dollars (307 billion euros at the time). The setbacks of Evergrande have led to a crisis of confidence in China which has overtaken groups previously considered financially solid, such as Country garden one of Evergrande’s competitors.
Real estate has long represented in the broad sense more than a quarter of China’s GDP and constituted an important source of employment. But this key sector is now under pressure, with falling prices deterring the Chinese from investing in stone. Beijing’s support measures for the sector have so far had little effect.