- by Mariko Oi
- Business reporter
Real estate giant Evergrande has filed for bankruptcy protection in the US as China’s real estate crisis deepens.
It would allow the heavily indebted company to protect its US assets as it works on a multi-billion dollar deal with creditors.
The move comes as problems in China’s real estate market add to concerns about the world’s second largest economy.
China Evergrande Group filed for Chapter 15 bankruptcy protection in a New York court on Thursday.
Chapter 15 protects the US assets of a foreign company while it restructures its debt.
Evergrande did not immediately respond to a request for comment from the BBC.
The group’s real estate unit owns more than 1,300 projects in more than 280 cities in the country, according to its website.
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With total debt estimated at more than $300 billion (£235 billion), the company was the largest indebted property developer in the world.
Some of the largest companies in the Chinese real estate market are struggling to find the funds to complete the developments.
“The key to this issue is completing unfinished projects because that will keep at least some of the funding flowing,” said Stephen Cochrane of Moody’s Analytics, an economic research firm.
He added that many homes are pre-sold, but if construction stops, buyers will not make mortgage payments, further straining developers’ finances.
Soft growth means China is not facing the price hikes that have upset many other countries and prompted central bankers elsewhere to sharply increase borrowing costs.
The country’s imports and exports also fell sharply last month as weak global demand threatened prospects for recovery for the world’s second-largest economy.
Earlier this week, China’s central bank unexpectedly cut its key interest rates for the second time in three months, in a bid to boost the economy.
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