Chinese police have arrested several employees of a subsidiary of Evergrande, the troubled real estate giant that is struggling with debts running into hundreds of billions of dollars.
Employees of Evergrande’s financial subsidiary, Evergrande Wealth Management, were arrested, police in Shenzhen, in the south of the country, said in a statement, without specifying the number of employees or the charges against them.
In the statement, police also urged the public to report any cases of suspected fraud to authorities.
Evergrande’s huge debt has helped deepen the country’s property market crisis, raising fears of global repercussions.
The real estate sector, which, along with construction, represents around a quarter of China’s GDP, constitutes a key pillar of the country’s growth and has experienced meteoric growth in recent decades.
But the massive debt accumulated by the biggest players in the sector – Evergrande had estimated its debt at $328 billion (307 billion euros) at the end of June – has been seen by Beijing in recent years as an unacceptable risk for the Chinese financial system. and overall economic health.
Authorities have gradually tightened developers’ access to credit since 2020, and a wave of defaults has followed – notably that of Evergrande.
Another Chinese real estate giant, Country Garden, narrowly avoided default in recent months, after reporting a record loss and debts of more than $150 billion.
State-backed developer Sino-Ocean is the latest company to show signs of trouble. On Friday, it announced it would suspend payments on offshore debts.
Separately, rating agency Moody’s recently downgraded the outlook for China’s real estate sector from “stable” to “negative”, arguing that government support measures will only have a short-term impact.