(crowd chattering)
- [Narrator] Social media footage shows crowds protesting
in front of the offices
of the Chinese real estate developer Evergrande.
- Evergrande is one of China's biggest property developers.
It has the biggest sales
in terms of property sales in China.
- [Narrator] In recent days, security has been stepped up
outside its headquarters as the struggling company
faces complaints from small investors,
unpaid suppliers and people unhappy that the homes
that they purchase haven't yet been completed.
In total, Evergrande owes more than $300 billion.
- It's one of the most indebted companies in the world.
Evergrande borrowed a lot of money,
what we call offshore in international financial markets,
and it's probably not gonna pay it back.
- [Narrator] Evergrande's massive debt problem
has rippled out into global markets with the S&P 500
seeing big swings.
Beyond the potential default, international investors
are particularly worried about what may happen next
as a big chunk of China's economy is linked to real estate.
- If Evergrande fails and drags down
the whole property sector, people worry if Chinese economy
could develop at high speed as it did in the past years.
- [Narrator] More bullish investors think China
could find a way to contain the fallout,
but others are less certain
that this can be safely diffused.
This one company has got markets on edge,
and it struggles could have big repercussions
for global investors.
- In recent months, Evergrande has been caught
into one of the largest crisis in its history.
- [Narrator] For years, Evergrande raised a lot of its cash
by borrowing billions of dollars from banks and investors,
and pre-selling unfinished apartments
so that it could amass more land and develop projects
in over 200 Chinese cities.
It has some 800 projects underway.
But this year, its shares have lost about 80% of their value
in just a few months.
Problems started for the company when pandemic lockdowns
hurt property sales, and when Chinese authorities
said they wanted to fight speculation in real estate
and announced rules that barred Evergrande
from taking on new debt.
- Many of its construction projects
all over China has stopped.
It started to face mounting pressure, complaints,
and protests from suppliers, contractors, home buyers,
and small investors all over the country.
- [Narrator] In this footage from Chinese social media,
people can be seen asking for compensation.
The Wall Street Journal couldn't determine
the author of the video or the exact date
of this particular protest,
and this clip has since been taken down.
These photos show small investors
being surrounded by security as they tried to enter
the company's headquarters in Shenzhen.
Evergrande has repeatedly said that it would try
to reimburse people and resume construction.
Evergrande's struggles are raising questions
over China's property market.
- Evergrande is such a big player
on China's property industry.
The property industry account for about 25%
of the total economy.
So, if growth in that sector is eroded,
we will see the macro economy under big challenges.
- [Narrator] In a memo on September 21st,
Evergrande's chairman acknowledged the issues
that the company faces, but vowed to push through the pain.
Wall Street Journal reporting found that Chinese authorities
have asked local governments
to contain the potential downfall of Evergrande.
But the government has been reluctant to bail it out,
and global investors are watching to see
how this could affect this year's market rally.
- The stock market has gone up a ton since the pandemic
especially in the US, and there's this sense of,
what can make things go higher and what could go wrong?
- [Narrator] Some investors think letting Evergrande fail
would be a sign that China is serious
about reducing debt in the economy.
- People we talked to widely believe
Beijing won't step in to protect shareholders
or bond holders this time, but they might take some actions
if they see social arrest spread,
or if they see financial markets
being roid heavily by Evergrande.
(upbeat music)