Creditors are holding a vote on whether to give Vanke, which has $50 billion of interest-bearing liabilities, more time to forestall a default on the loan. Vanke failed to make a payment on December 15 and proposed a one-year extension.
Vanke is the biggest property developer in China, and the fact that it is seeking such an extension is reflective of the current dire state of the property market. Beijing wants to avoid having a sudden public collapse, and managed to smooth over a situation with Evergrande which was threatening to do that.
Vanke, and the upcoming vote, provide guidance as to how the system plans to deal with the deeper problems afflicting China’s property market sector. It will not be easy.