China’s property firm Country Garden could report a $7.6bn loss
One of China’s most outstanding property developers, Country Garden, has warned that it could report a loss of up to $7.6bn (£6bn) for the first six months of the year.
The announcement is the latest indication of the significant problems faced by the planet’s second-largest economy.
Country Garden faces problems as China’s economy sinks:
This week’s official numbers showed China had fallen into deflation for the first time in over two years. Exports have even slipped sharply, while youth unemployment is at a record high.
On Friday afternoon, the stock of Country Garden Holdings was down by nearly 5% in Hong Kong trade.
Country Garden “is expected to record a net loss ranging from approximately RMB45 billion [$6.24bn; £4.9bn] to RMB55 billion for the six months ended 30 June 2023,” the firm said in an announcement to the Hong Kong Stock Exchange.
The expected loss compares to a $265m gain for the same time last year. The company also said it had created a unique task force for its chairman Yang Huiyan to find solutions to turn the business around.
Earlier Thursday, rating agency Moody’s downgraded the firm’s rating, noting “heightened liquidity and refinancing risks”.
It arrived as China faced some economic challenges, which have raised questions regarding the speed of its post-pandemic recovery.
Earlier this week, official numbers showed the nation’s exports tumbled by a larger-than-expected 14.5% in July compared with a year before, while imports fell 12.4%.
Youth unemployment, which is at a record high, is closely watched as 11.58 million university graduates are anticipated to enter the job market this year.
On Thursday, US President Joe Biden stated China’s rising economic problems make it a “ticking time bomb.”
At a fundraising event in the western state of Utah, Mr Biden even said, “China is in trouble”, as he emphasised its high unemployment and ageing workforce.
The nation is also tackling ballooning local government debt and challenges in the housing market.
