Evergrande boss is suspected of “illegal” activities, according to the Chinese giant itself

The Chinese real estate giant Evergrandewhich is grappling with serious financial difficulties, claimed on Thursday that its boss, Xu Jiayin, is suspected of activities “illegal”, after suspending the trading of its shares on the Hong Kong Stock Exchange.

This announcement took place a day after Bloomberg published that the leader was under “residential surveillance”.

Trading in the group’s shares was suspended on Thursday morning on the Hong Kong Stock Exchange, without any specific reason being given to justify the decision.

They were also paralyzed “at 09:00″ (01H00 GMT) the exchanges of securities of two units of the group dedicated to real estate services and electric vehicles.

“The company received a notification from the competent authorities according to which Xu Jiayin (…) is subject to coercive measures in accordance with the law due to suspicion of illegal crimes“, he indicated Evergrande in a statement published on the Hong Kong Stock Exchange, without giving further details.

In China, the term “coercive measures” refers to a form of deprivation of liberty to guarantee the proper functioning of a criminal process.

The financial information agency Bloomberg revealed on Wednesday, citing anonymous sources, that the founder and owner of the group had been detained earlier this month by Chinese authorities.

Xu, 65, remains low “residential surveillance”, which does not imply that he has been arrested or charged with a crime, according to the agency.

Detention

In mid-September, police in Shenzhen (south) declared that they had detained several employees of Evergrandebut did not specify the number or the accusations.

According to Caixina prestigious Chinese financial site, two former Evergrande executives were arrested.

The real estate giant had resumed trading just a month ago after a 17-month suspension for failing to publish its financial results.

On Sunday the company declared that it could not issue new debt because a subsidiary, Hengda Real Estate Groupwas under investigation.

Two days earlier he had reported that a meeting scheduled this week on a major restructuring plan for his high debt was not going to take place because it was “necessary to readjust the terms“of that plan to adapt”to the objective situation and the demands of creditors”.

The company’s real estate arm defaulted on a key debt this week.

Pillar of the economy

The real estate and construction sector has been a pillar of China’s growth – it represents a quarter of GDP – and has experienced a strong boom in recent decades.

But the massive debt contracted by its main companies came to be considered by Beijing as an unacceptable risk for its economy.

The Evergrande crisis compounded a larger slowdown in the Chinese economy, which drove youth unemployment to historic levels.

The government set a growth target of around 5% for this year, which would be one of its worst results in decades, excluding the pandemic period.

Since 2020, authorities have restricted access to credit for developers, which has led to several defaults on payments, including Evergrande.

Another major Chinese real estate company, Country Garden, is on the verge of bankruptcy after reporting record losses and debt of more than $150 billion.