HONG KONG — Xu Jiayin was China’s richest man, a symbol of the country’s economic rise who helped transform poverty-stricken villages into urbanized metropolises for the fledgling middle class. As his company, China Evergrande Group, became one of the country’s largest property developers, he amassed the trappings of the elite, with trips to Paris to taste rare French wines, a million-dollar yacht, private jets and access to some of the most powerful people in Beijing.
“All I have and all that Evergrande Group has achieved were endowed by the party, the state and the whole society,” Mr. Xu said in a 2018 speech thanking the Chinese Communist Party for his success.
China is threatening to take it all away.
The debt that powered the country’s breakneck growth for decades is now jeopardizing the economy — and the government is changing the rules. Beijing has signaled that it will no longer tolerate the strategy of borrowing to fuel business expansion that turned Mr. Xu and his company into a real estate powerhouse, pushing Evergrande to the precipice.
Last week, the company, which has unpaid bills totaling more than $300 billion, missed a key payment to foreign investors. That sent the world into a panic over whether China was facing its own so-called Lehman moment, a reference to the 2008 collapse of the Lehman Brothers investment bank that led to the global financial crisis.
struggles have exposed the flaws of the Chinese financial system — unrestrained borrowing, expansion and corruption. The company’s crisis is testing the resolve of Chinese leaders’ efforts to reform as they chart a new course for the country’s economy.
If they save Evergrande, they risk sending a message that some companies are still too big to fail. If they don’t, as many as 1.6 million home buyers waiting for unfinished apartments and hundreds of small businesses, creditors and banks may lose their money.
“This is the beginning of the end of China’s growth model as we know it,” said Leland Miller, the chief executive officer of the consulting firm China Beige Book. “The term ‘paradigm shift’ is always overused, so people tend to ignore it. But that’s a good way of describing what’s happening right now.”
speech accepting an award for his charitable donations.
He went to college and then spent a decade working at a steel mill. He started Evergrande in 1996 in Shenzhen, a special economic zone where the Chinese leader Deng Xiaoping launched the country’s experiment with capitalism. As China urbanized, Evergrande expanded beyond Shenzhen, across the country.
Evergrande lured new home buyers by selling them on more than just the tiny apartment they would get in a huge complex with dozens of identical towers. New Evergrande customers were buying into the lifestyle associated with names like Cloud Lake Royal Garden and Riverside Mansion.