Beijing/Washington: The Evergrande crisis resulting from China’s leading real estate company is a deliberate move by the Chinese communist regime, claims Indian analyst Devina Mehra. ‘The Evergrande crisis is like a controlled detonation, and it is possible in a government-controlled economy like China,’ Mehra said. She has also warned that the crisis would hit the banking sector the hardest. Meanwhile, with Evergrande’s decline and its repercussions, China’s central bank has provided about $18 billion in cash to the economy.
Over the past year, shares of Evergrande, China’s leading real estate and construction company, have slumped more than 80%. There are claims that the company is unable to repay the outstanding debt of about $305 billion. The company is due to make payments of $83 million on Thursday. There are fears that if the company does not repay its debts, it will deliver blows to the global economy. Also, the company may go bankrupt if it fails to do so. US website ‘The Street’ has warned that the Evergrande crisis could prove to be a ‘Lehman moment’ for China.
Against this backdrop, institutional broking firm First Global’s analyst Devina Mehra claims that the Evergrande crisis may have been part of a deliberate move by China’s communist regime. Mehra said in an interview that the Chinese regime would compel the Evergrande to go into bankruptcy to bar a bigger problem or crisis in the economy. She also pointed out that after Evergrande, China could force few other big companies to fail. Mehra has compared the Evergrande crisis to a controlled detonation. She also said that China’s economy is entirely under the control of the ruling regime, and this may happen in such an economy.
While the Evergrande shares were plummeting last week, many foreign analysts have claimed that the Chinese regime would let the company collapse. Mehra’s statements also affirm it. However, the financial markets, as well as investors in the US and Europe, remain fearful. Analysts in the United States and Europe fear that the Evergrande crisis may deliver shocks to the global economy. Furthermore, British analysts have warned that Evergrande’s bankruptcy could create a chaotic situation in the debt market. Investments in China and the state of its economy are claimed to have caused panic in London’s financial sector.
Larry Kudlow, an analyst at US news channel Fox News, said the Evergrande crisis could be part of a campaign launched by Chinese President Xi Jinping against the private enterprise. US investor and analyst Jim Chanos warned that the Evergrande crisis could be far worse than Lehman Brothers collapse in the United States.
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