Pressure is building on Beijing to intervene more forcefully to restore confidence in its reeling property market. In the latest sign of stress for the market, people with knowledge of Beijing’s decision-making said authorities are investigating whether Hui Ka Yan, the billionaire founder of heavily indebted property developer China Evergrande Group, attempted to transfer assets offshore while the company was struggling to complete unfinished projects.
The company had disclosed an investigation into its founder last week, but offered little explanation. It didn’t respond to questions over the weekend. Evergrande, whose plans to restructure billions of dollars of debts have collapsed, is one of many property developers struggling to regain their footing three years after the popping of China’s housing bubble. As bad news in the sector piles up, economists and investors are increasingly calling for more coordinated measures to restore confidence and help developers clear up their debts.
Ultimately, many say, it could require significant government intervention, much as the U.S. was forced to step in during the property-induced financial crisis in 2008. “The government should take more decisive steps to clean up the troubled property sector, allowing losses to be allocated among developers, banks and other stakeholders,” said George Magnus, former chief economist of UBS and an associate at Oxford University’s China center.
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