- Apartment building Evergrande in liquidation
- Chinese demand for Aussie iron ore affected
Chinese property giant Evergrande has plunged into liquidation, potentially jeopardising demand for Australian iron ore used to make steel.
The future of Australia’s biggest export could be rocky after a Hong Kong judge Linda Chan ordered it to wind up its business owing to a ‘lack of progress on the part of the company putting forward a viable restructuring proposal’.
The glut of apartment towers saw China’s second biggest apartment builder incur debts of more than $400billion, sparking concerns from the Communist Party government about its solvency.
This has ramifications for Western Australia, the world’s biggest supplier of iron ore as the Evergrande’s liquidation undermines confidence in China’s property market.
Evergrande had been given a reprieve in December to restructure its debts.
Chinese property giant Evergrande has plunged into liquidation, potentially jeopardising demand for Australian iron ore used to make steel (pictured is an Evergrande commercial complex in Beijing)
Fergus Saurin, a lawyer representing an array of creditors, said Evergrande had avoided talking with them.
‘The company has failed to engage with us. There has been a history of last-minute engagement which has gone nowhere,’ he said.
In August 2020, Chinese President Xi Jinping’s government introduced a new ‘three red lines’ policy requiring developers to sell assets, even at a cheap discount, to avoid piling on more debt they could not service.
Iron ore is now trading at $US137.50 a metric tonne, a big drop from $US216 in July 2021 during the Covid pandemic when Evergrande’s debt issues became more of a concern.
Evergrande’s liquidation threatens to undermine confidence in China’s financial system, in the nation of Australia’s biggest trading partner.
