Evergrande risks 'controllable', says China's central bank
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Zou's comments came amid growing concern that the cash crunch at Evergrande, which is struggling with more than $300 billion in liabilities
China's central bank on Friday broke its silence over Evergrande's debt troubles as it said that the risk of spillover from the property giant to the financial sector was "controllable," state media reported.
Local authorities are "carrying out risk disposal and resolution work in accordance with the principles of rule of law and marketisation," People’s Bank of China official Zou Lan said at a briefing, according to an outlet of the Xinhua state news agency.
Zou's comments came amid growing concern that the cash crunch at Evergrande, which is struggling with more than $300 billion in liabilities, could lead to contagion for the Chinese economy.
Evergrande's liabilities make it the most indebted property firm in the world. The debts stretch into hundreds of billions of dollars, which makes it equal to 2 per cent of Chinese GDP.
Shares in Evergrande have plunged 80 per cent so far this year, while its property services unit has dropped 43 per cent as the group scrambles to raise funds to pay its many lenders and suppliers.
"In recent years, the company has been poorly managed, and was unable to operate cautiously in accordance with changes in the market situation," Zou said.
He added, "Instead, it blindly diversified and expanded, causing the serious deterioration of operating and financial indicators, and eventually an explosion of risk."