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China property crisis: Country Garden faces reckoning as sluggish economy, bets on smaller cities unravel

  • Beleaguered Country Garden faces US$14.9 billion in debt maturity in the next year, as it tries to avoid becoming latest Chinese developer to default
  • Country Garden bet big on future growth in China’s tier 3 and tier 4 cities, where overbuilding and declining population now threaten property prices

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Illustration by Henry Wong
Yulu Aoin Hong KongandChad Brayin London

As Country Garden Holdings founder Yang Guoqiang prepares to celebrate his 69th birthday next month, the company he started more than three decades ago is mired in the biggest crisis in its history.

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Country Garden, China’s largest developer until last year, is facing a mountain of debt repayments in the next year. It has to contend with a slowing property market as consumers sit on the sidelines amid sluggish economic growth, while concerns about the sector have mounted following a string of defaults by China Evergrande Group and other Chinese peers over the past two years.
The Foshan-based company, which has been under the spotlight since July because of its liquidity problems, bought itself a bit of time after it managed to extend repayments on more than a half-dozen of its onshore bonds due earlier this month and beat a deadline on September 5 to make good on missed interest payments on two of its offshore bonds in August.

However, it reportedly missed an interest payment on another US-dollar denominated bond on September 17, and still faces 109 billion yuan (US$14.9 billion) in bank loans and bonds that are set to come due in the next 12 months.

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Anger mounts as China's property debt crisis leaves flats unfinished

Anger mounts as China's property debt crisis leaves flats unfinished
Its contracted sales fell a further 72 per cent to 7.9 billion yuan year on year in August after it reported the highest drop in sales among China’s top 100 developers in the first seven months of this year.
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But, how did Country Garden, the biggest Chinese home builder by sales between 2017 and 2022, and a company known for its conservative debt management when compared with its peers, find itself in such dire straits?

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