To mark the completion of a residential complex called World City, the indebted property giant China Evergrande Group held an elaborate red carpet ceremony on Monday, with eight cannons firing off confetti before a cheering crowd. The company then released a series of images featuring newly completed buildings covered with bright red decorations.
Just weeks earlier, Evergrande had been declared in default. The developer has unpaid bills in excess of $300 billion and has struggled to pay back its creditors and business partners. Some in China saw the company’s celebrations as premature.
For months, Evergrande could not pay its builders, painters and contractors. The company, whose problems have made investors wary of China’s once-flourishing property sector, remained relatively silent as its debt problems led to panic in global markets and among people around the country who had purchased apartments before they were completed.
Construction on more than a million homes stalled, and then, two weeks ago, Evergrande signaled it could no longer go on — officially entering into default after failing to make a final debt payment to foreign investors. Now, the developer has pledged to start paying its workers again and to deliver homes, part of a push to restore confidence in the company and the sector.
“We will sprint at full speed,” Xu Jiayin, Evergrande’s billionaire founder, told top executives on Sunday, according to a statement. He did not provide any details about where the money would come from, nor did he say anything about the failure to pay foreign creditors.
Despite the company’s bullishness, the challenges it faces remain enormous.Some home buyers say they are still in the dark about their unfinished apartments. Former employees and contractors continue to wait for back payments. Dozens of lawsuits from business partners that have piled up in court remain unresolved. Property sales across China, meanwhile, have fallen for five consecutive months.
A few weeks ago, government technocrats stepped in to help steer the company. The head of China’s Ministry of Housing and Urban-Rural Development said last week that Beijing was committed to “guaranteeing home deliveries, protecting people’s livelihoods and maintaining social stability.” With just a few days left in the month, Mr. Xu pledged on Sunday to deliver 39,000 apartment units by the end of the year.
The company has also said that it has restarted partnerships with more than 80 percent of its long-term suppliers of materials, and indicated that it would soon be able to repay its debt and begin sales of new apartments.
Evergrande’s sudden rush of promises has created more questions than answers for the home buyers, suppliers, contractors and creditors who have yet to hear directly from the company. Some people have started to track which of Evergrande’s hundreds of property projects have actually restarted construction.
Li Menghe, the chairman of Qingdao Wanhe Construction & Decoration Group, a glass supplier to Evergrande, has begun using his official Weibo account to post daily details on the hundreds of projects that have revved up again in recent days. Home buyers respond to his posts with more questions as they try to figure out if their apartments are likely to be completed.
One home buyer asked about the on-and-off construction progress for one of Evergrande’s residential projects in the province of Shandong.
“Brother, there is no money in the supervised account,” Mr. Li replied, referring to the escrow account where Evergrande was supposed to place the money it received upfront from the sale of the apartments. He did not explain how he knew this, or respond to a request for comment. But in some government complaint forums online, local officials have told home buyers that money in developers’ escrow accounts is missing.
Zhang Yao, a yoga instructor who taught at Evergrande Healthy Land, a health and wellness park in the central province of Henan, said she was asked to resign in September but is still owed $750. Ms. Zhang, 29, said she had been paid through an employment agency but had recently confronted an Evergrande manager, who was unable to give her a date for when the company would pay her.
She said the manager told her that Evergrande’s own employees had not been paid since October. A representative for the company did not respond to a request for comment.
In September, Evergrande employees joined worried home buyers in protesting outside company offices around China. Some were later detained or visited by the local police. As many as 80 percent of Evergrande employees were at one point asked to put up money to help fund the company’s operations.
Mr. Cao, an Evergrande home buyer who requested The New York Times use only his surname for fear of being visited by the police, said he had put a down payment on a $160,000 apartment in Jiangxi Province that was nearly completed and was supposed to be delivered in January. He doesn’t expect the apartment will be done in time because there are only around 20 workers each day on the construction site, he said.
Understand the Evergrande Crisis
What is Evergrande? The Evergrande Group, a sprawling Chinese real estate giant, has the distinction of being the world’s most debt-saddled developer. It was founded in 1996 and rode China’s real estate boom that urbanized large swathes of the country, and has millions of apartments in hundreds of cities.
How much does it owe? Evergrande has more than $300 billion in financial obligations, hundreds of unfinished residential buildings and angry suppliers who have shut down construction sites. Things got so bad that the company paid its overdue bills with unfinished properties and asked employees to lend it money.
How did the company get into financial trouble? For decades, China’s real estate market operated unrestrained. But recently, Beijing started taking measures, including new restrictions on home sales, to tame the sector. Evergrande borrowed heavily as it grew and expanded into new businesses, and eventually ended up with more debt than it could pay off.
Why does Evergrande’s fate matter? The company’s collapse would reverberate around the world, affecting global markets, the millions of jobs the company creates and hundreds of thousands of employees. China’s whole residential and commercial real estate market, which drives up to a third of China’s economy, could crumble.
How has the Chinese government addressed the crisis? Beijing sat on the sidelines for months as Evergrande neared financial collapse. It wasn’t until December that the company said officials from state-backed institutions had joined a risk committee to help restructure the business.
Where do things stand with Evergrande now? For months, the real estate giant averted default by making 11th-hour payments on its bonds. But on Dec. 9, a major credit ratings firm declared Evergrande in default after it failed to meet a payment deadline. What is next for the company, bankruptcy, a fire sale or business as usual, has yet to be determined.
“I think the contractors still haven’t been fully paid,” he said. “If they had the money, they should have worked faster for sure.”
Amid the uncertainty, Evergrande’s colorful founder, once known for wearing a flashy gold-buckled Hermès belt, has been largely absent from public view. In early September, he posed behind top executives signing a “military order” pledging to deliver homes. (Over the following months, Evergrande would finish less than 10,000 units.) In a memo leaked later that month, he promised employees they would soon “walk out of the darkness.”
Last week, Evergrande published new photographs of Mr. Xu presiding over a meeting during which he called on executives to keep delivering homes. Then came dozens of photos of suddenly completed apartment projects. Home buyers were photographed happily signing documents that would allow them to finally take possession of their long-awaited apartments.
Some online commentators expressed disbelief that Evergrande could suddenly go from the brink of collapse to business as usual, or bristled at the idea that buyers should celebrate receiving the homes for which they had already paid.
“Today people become so grateful and feel they owe the developer a big favor,” remarked Michael Yu, a popular influencer on Duoyin, the Chinese version of TikTok. “What happened to people’s bottom line these days?”
With Evergrande under the guidance of government officials, some home buyers and investors are likely to feel more hopeful. This week, the company delivered 1,419 apartments at its World City development as part of its push to finish 39,000 homes by the end of the year. But Evergrande is still on the hook for an estimated 1 million more.