Evergrande's multi-billionaire owner may have to deliver manure again

On Monday, September 20, during a trading day on the Hong Kong stock exchange, the shares of Chinese developer Sinic collapsed by 87 percent. Experts point out that the shares collapsed due to the "domino effect", which was caused by the crisis of China's another developer giant, Evergrande.

In 2020, Evergrande owner Hui Ka Yan was among the top three Chinese wealthy men. Today, however, the development company that he owns has found itself on the verge of default. Evergrande's debts are overwhelming and reach an astronomical amount of $302 billion. How did Hui Ka Yan lead his development empire to such a deep crisis?

Evergrande is due to pay its investors $83 million on September 23rd. S&P Global believes that the Chinese government refuses to bail out the debt-stricken company. However, Hui Ka Yan is full of optimism. He assured his employees that his company will extricate from the crisis, although he did not specify how.

Many in China criticized the billionaire on Weibo social network, noting that his speech was full of nonsense. Others called him a man who deceives people.

Hui did not always rest on his laurels. When he was young, he worked as a tractor driver to deliver manure. He then worked at a cement plant for two years. At some point of his life, Hui met a fortune teller who told him that he would have a "golden cup in the future." In late 1970s, Hui quit his job and entered the Wuhan University of Science and Technology (it was then called the Institute of Iron and Steel). After graduating and working for several years at the Wuyang Iron and Steel Company, he founded Evergrande Group in 1996.

The company invested in inexpensive real estate. As China's economy grew, Evergrande was growing too. By 2018, the Brand Finance report had recognized the holding as the most valuable real estate company in the world. According to Forbes estimates for 2018, the poor Chinese boy with 70% of company's shares became the richest man in China.

It is worthy of note that Hui Ka Yan also ones the Guangzhou Football Club, one of China's most successful football teams.

This summer, the founder of Evergrande attended the centenary of the Chinese Communist Party. At the same time, the Communist Party of China clearly does not intend to solve Evergrande's debt problems, despite Hui's friendship with the brother of the former Premier of the State Council of the People's Republic of China Wen Jiabao.

Hui's financial position may soon be in jeopardy. The collapse of Evergrande, which employs about 200,000 people, may trigger dangerous fluctuations for the entire Chinese economy.

According to experts, one of the reasons, for which the holding has found itself on the brink of the disaster is the loss of its political protection.

Hui has built a fragile financial pyramid with the connivance of Chinese regulators, because the country was in need of both housing and economic growth. However, after the pandemic and the deterioration of relations with the United States, the Chinese authorities decided to focus on science and technological development, rather than accumulated debts.

The official policy of China has also changed. The Chinese authorities began to actively promote the idea of ​​reducing the difference in welfare between the country's population. In other words, the rich were encouraged to share their wealth with the poor so that everyone could be comfortably off. Hui is not likely to win this fight for a warm place in the sun.