China Evergrande, Part 2

Post-Script

Just after hitting “send” on my Evergrande post from earlier today I came across another good summary of the Evergrande news and commentary, some of which goes beyond what was in my post this morning. You can find this on Adam Tooze’s site, Chartbook, found here. Chartbook is a paid site, but this particular post is not behind a pay wall. I encourage your to flip through it.

And I note in rereading my previous post that I botched an important number: the number of individuals working on Evergrande projects. I said that Evergrande directly employed 3mm people, with multiples of this number working indirectly on Evergrande projects (at suppliers etc). This should have caught your (and my) attention as somewhat improbable. It turns out that 3mm is an estimate of the total number of people working on Evergrande projects, not the number of people employed directly by Evergrande. The true number of Evergrande employees is more like 200,000 but the 3mm number is no doubt the one that concerns the Chinese government. This number stuck in my head, but I mischaracterized it.

This was a careless and dumb mistake on my part. I was wrong; I am sorry; I will try not to do it again. (If you don’t recognize the reference, read here.)

The Evergrande story is ongoing, with another big (USD) interest payment due tomorrow. And note that Evergrande has about $40bn in debt maturing this year, which may be challenging to refinance with the high yield bond markets in turmoil. So expect more news and possibly more posts from me.

In the meantime, here are a few more stories from today’s press which you might find interesting, as I did:

Western Investors Bargain Hunt in China Bond Route, WSJ, 9.22.2021.

Evergrande Struggles Reflect China’s Efforts to Rein in Multiyear Debt Boom, WSJ, 9.22.2021

What is China Evergrande, and Why is its Crisis Worrying Investors, WSJ, 9.22.2021