Chinese authorities are instructing local governments to prepare for the potential downfall of embattled property developer China Evergrande Group, officials familiar with the discussions told The Wall Street Journal. The talks signal a reluctance to bail out the debt-saddled property developer while bracing for any fallout from the company’s travails.
Evergrande has liabilities of around $300 billion and faces a series of bond payments in the coming weeks.
Local governments have been ordered to assemble groups of accountants and legal experts to examine the finances around Evergrande’s operations in their respective regions, talk to local state-owned and private property developers to prepare to take over local real-estate projects, the officials told the WSJ.
The officials characterized the actions being ordered as “getting ready for the possible storm,” saying that local-level government agencies and state-owned enterprises have been instructed to step in to handle the aftermath only at the last minute should Evergrande fail to manage its affairs in an orderly fashion.