Local authorities fear potential embezzlement of the funds that Evergrande still has left.
Taken from RT
At least two Chinese cities have taken steps to prevent Evergrande, a property company facing a severe liquidity crisis, from misusing property sales revenue and failing to meet its obligations to customers, the Financial Times.
According to a circular obtained by the newspaper, the housing office of one of the neighborhoods in Guangzhou (Canton) asked an Evergrande subsidiary last Wednesday to transfer the pre-sale revenue of the stalled Sunshine Peninsula residential project to a state-controlled account so that "the interests of homebuyers can be protected and construction can continue.".
The housing office in Zhuhai, a city near Macau, submitted a similar request to a residential project by the real estate company this month, people familiar with the situation confirmed to the Financial Times.
With the money tied up in government accounts, Evergrande cannot transfer it or use it for other operations, such as paying off its debt. It is currently the most indebted real estate company in China, with liabilities totaling over $300 billion, affecting more than 250 banks and non-bank financial institutions.
Meanwhile, the Chinese government's priority is completing the real estate company's ongoing projects, although it remains unclear how it plans to restart stalled projects where sales revenue has already been reallocated. A company executive told the Financial Times that they do not have "enough resources to complete all projects on time" and need "more external assistance.".
