People gather to demand repayment of loans and financial products as security personnel guard outside Evergrande's headquarters in Shenzhen, Guangdong province, China, September 15, 2021. REUTERS/David Kirton
China Evergrande Group, saddled with more than $300 billion in total liabilities equivalent to 2% of China's GDP, is in the throes of a liquidity crisis that has it scrambling to raise funds to pay its many lenders and suppliers. The plight of Wu and many others like him has thrown a spotlight on the extensive use of commercial paper in China's property sector. Developers favour it as they prefer to not pay upfront and because it doesn't count as interest-bearing debt. The paper promises contractors and suppliers payment on a future fixed date, usually within one year.
It's not clear just how much commercial paper Evergrande as a group has issued, but its flagship unit Hengda Real Estate Group Co Ltd disclosed some $32 billion worth as of end-2020. "I feel depressed, and sorry for my family, having to accompany me in a life in debt," he said. He declined to give his name, citing rumours of physical threats being made against protesters.