Several Evergrande staff arrested

BEIJING: Police in China have arrested several employees of a subsidiary of troubled Chinese property giant Evergrande, authorities said Saturday.

Employees at Evergrande’s financial subsidiary, Evergrande Wealth Management, were arrested, police in the southern city of Shenzhen said in a statement, without specifying the number of employees or the charges against them.

The statement called on the public to report any cases of suspected fraud to the authorities.

Evergrande’s enormous debt has contributed to the country’s deepening property market crisis, raising fears of a global spillover.

The property sector, which along with construction accounts for about a quarter of China’s GDP, is a key pillar of the country’s growth and has experienced a dazzling boom in recent decades.

But the massive debt accrued by the industry’s biggest players — Evergrande had estimated debt of $328 billion (307 billion euros) at the end of June — has been seen by Beijing in recent years as an unacceptable risk for China’s financial system and overall economic health.

Authorities have gradually tightened developers’ access to credit since 2020, and a wave of defaults have followed — notably that of Evergrande.

Another Chinese property giant, Country Garden, has narrowly avoided default in recent months, after reporting a record loss and debts of more than $150 billion.

State-backed developer Sino-Ocean on Friday announced it would suspend payments of offshore debts, the latest company to show signs of trouble.

Meanwhile, the Moody’s rating agency this week downgraded the outlook for China’s property sector from “stable” to “negative,” arguing that the government support measures will have only a short-term impact.