EGRN - Why China's Debt Crisis and Housing Concerns May Be a Problem for the U.S.
China, the world's second-largest global economy, is on shaky ground in terms of its financial and real estate markets. News over the inevitable default of the country's second-largest developer, China Evergrande Group (OTC: EGRN.F), caused market volatility in early November 2021. But the company, against all expectations, managed to come up with the money to pay the bonds due, buying some time and a little confidence for the outcome of the country's future.
Evergrande, which barely avoided default earlier this summer, is having what many are dubbing a "Lehman Brothers moment," being pinpointed as the potential pivot point for the Chinese real estate and financial markets. In other words, the straw that broke the camel's back. The country's current predicament is leaving investors wondering how it could impact the U.S. markets.
Evergrande is a massive operator in the real estate industry across China. The company owns over 1,300 real estate projects across 280 cities across China, employing roughly 200,000 people and creating more than 3.8 million jobs each year. If the company defaults, it could be the start of a collapse, similar to what we saw in the United States during the great financial collapse, causing other entities and developers to follow suit. But the potential issues run a lot deeper than a developer's default.
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Why China's Debt Crisis and Housing Concerns May Be a Problem for the U.S.