Xu Jiayin, the chairman of Evergrande who once rode the Chinese real estate boom to become the second-richest person in Asia, has fallen from grace as Chinese securities authorities permanently banned him from entering the stock market. Evergrande once became China’s second-largest real estate developer, but in 2021, it began defaulting on offshore bonds. It was ordered to liquidate its listed company on the Hong Kong stock exchange earlier this year, pushing it to the epicenter of the Chinese real estate crisis.
Chinese economic media outlet Jielian reported on the 18th that the China Securities Regulatory Commission (CSRC) sent a pre-notification of administrative penalties and securities market entry ban to Evergrande Real Estate. The CSRC also issued a lifetime ban on securities market entry to former Evergrande Group CEO Xia Haijun and Xu. Xu was warned and fined 15 million yuan (approximately $2.08 million), while Xia was warned and fined 5 million yuan (approximately $694,600). Evergrande Real Estate was also issued a correction order and fined 10 million yuan (approximately $1.39 million).
The problem that the securities authorities pointed out was that there were false statements in the annual reports that Evergrande Real Estate submitted in 2019 and 2020. The CSRC stated, “Xu Jiayin decided and organized financial manipulation, and the method was wicked, and the circumstances were serious.” It also pointed out that “Xia Haijun organized, arranged, and compiled false financial reports.”
Xu, whose wealth reached $42 billion in 2017, has seen his fortune plummet after the so-called “Evergrande crisis.” It is now estimated to be around $1.8 billion. Evergrande announced last September that Xu was under compulsory measures (arrest) on suspicion of crime. Before Xu, some former and current employees of Evergrande were also arrested and detained by the authorities.
Evergrande, which he founded in Guangdong province in 1997, was a conglomerate that became China’s second-largest real estate developer. It encompassed finance, healthcare, travel, sports, and electric car businesses. However, Evergrande fell into financial difficulties as the Chinese authorities had state-owned banks successively recover loans related to real estate projects to reduce financial risks and stabilize housing prices.
The debts accumulated through aggressive mergers and acquisitions, new business investments, and reckless business expansion pressured the company, and by the end of 2021, it defaulted on offshore bonds. It is now the real estate development company with the biggest debt in the world, totaling approximately 2.39 trillion yuan (approximately $332 billion). In January of this year, a Hong Kong court also issued a liquidation order for China Evergrande, a Hong Kong-listed company of Evergrande.
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