China’s old economy is headed for a hard landing

Friday, 27 August 2021

Even by China’s capital misallocation standards, this one is a doozy. In April, Evergrande’s EV division was worth $120bn. Today it is worth $10bn:

Everything Evergrande is being annihilated as it moves to sell (that is, liquidate) assets to meet the Three Red Lines policy. This is going to weigh on property starts as a cloud hangs over developments:

And over counter-party credit:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.