Amid China's real estate turmoil, Dexin faces liquidation, echoing Evergrande's fate. Dexin, based in Zhejiang, accrued a massive debt of USD 8.9 billion. Defaults on payments triggered its downfall, culminating in a winding-up petition from China Construction Bank. This event underscores broader sectoral challenges, with firms like Country Garden and Shimao also under pressure. China's economy, heavily reliant on real estate, faces uncertainty as the government intervenes to stabilize the industry. Dexin's liquidation highlights the magnitude of the crisis and its potential implications for China's economic trajectory.
Hong Kong courts have dealt another blow to China's struggling real estate sector, ordering the liquidation of developer Dexin. This decision comes as Beijing faces a debt crisis that threatens a crucial pillar of the Chinese economy.
Dexin joins a growing list of Chinese developers buckling under immense financial pressure. The company's woes stem from a years-long crisis in China's property market. Trading of Dexin's shares on the Hong Kong Stock Exchange was halted shortly before noon on Tuesday after a significant decline.
Headquartered in Zhejiang province, Dexin focused primarily on residential and commercial development in China's affluent Yangtze River Delta region. According to its 2023 annual report, the company reported a staggering total liability of 64.4 billion yuan (approximately USD 8.9 billion) by the end of last year.
Matters escalated in March 2023 when Dexin faced a winding-up petition filed by China Construction Bank (Asia) Corporation Limited. This petition stemmed from Dexin's default on a USD 350 million senior note payment in December 2022. Although Dexin secured approval for a restructuring plan last year, they were unable to fulfil its terms.
Dexin's liquidation is just the latest example of the turmoil plaguing China's real estate sector. In January 2024, a Hong Kong court ordered the liquidation of Evergrande, once China's largest real estate firm. Other developers, including Country Garden and Shimao, are also facing winding-up petitions in Hong Kong.
The real estate sector plays a critical role in China's economy, accounting for a significant portion of the country's GDP. Its struggles pose a major challenge for the government. Beijing is currently taking steps to stabilize the industry, but the effectiveness of these efforts remains uncertain. Dexin's liquidation serves as a reminder of the ongoing crisis and its potential to hinder China's economic growth.
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