HONG KONG, CHINA — Beleaguered property giant China Evergrande suspended trading of its shares on the Hong Kong stock exchange on Thursday, according to notices posted by the bourse, as the debt-ridden company grapples with severe financial difficulties.

Trading in its two other units — the firm’s property services and electric vehicle groups — also stopped at 9:00 am local time (0100 GMT), according to the notices.

The three entities had a combined market value of 16.7 billion HK dollars (US$2.1 billion) on Wednesday, Bloomberg reported.

Evergrande only just resumed trading a month ago, after the company was suspended for 17 months for not publishing its financial results.

The halt in trading comes a day after a Bloomberg report that Evergrande’s billionaire boss Xu Jiayin was being held by police under “residential surveillance”.

On Sunday, the firm said it was unable to issue new debt as its subsidiary, Hengda Real Estate Group, was being investigated.

And last Friday it said meetings planned this week on a key debt restructuring plan would not take place.

The firm said it was “necessary to reassess the terms” of the plan in order to suit the “objective situation and the demand of the creditors”.

Evergrande’s enormous debt  — the firm estimated it at US$328 billion at the end of June — has contributed to the country’s deepening property sector crisis, raising fears of a global spillover.

The company’s property arm this week missed a key bond payment, and Chinese financial website Caixin reported that former executives at the firm had been detained.

That crisis has deepened a broader slowdown in the world’s second-largest economy, with youth unemployment at record highs.

The government has set an economic growth target of around five percent for this year, which would represent one of its worst performances in decades, excluding the period of the pandemic.

Massive debt

China’s property sector has long been a key pillar of growth — along with construction it accounts for about a quarter of GDP — and it experienced a dazzling boom in recent decades.

The massive debt accrued by the industry’s biggest players has, however, been seen by Beijing in recent years as an unacceptable risk for the financial system and overall economic health.

Authorities have gradually tightened developers’ access to credit since 2020, and a wave of defaults has followed — notably that of Evergrande.

The now long-running housing crisis has wreaked misery on the lives of homebuyers across the country, who have often staked life savings on properties that never materialised.

A wave of mortgage boycotts spread nationwide last summer, as cash-strapped developers struggled to raise enough to complete homes they had already sold in advance — a common practice in China.

Earlier this month, authorities in the southern city of Shenzhen said they had arrested several Evergrande employees, also calling on the public to report any cases of suspected fraud.

Another Chinese property giant, Country Garden, narrowly avoided default in recent months, after reporting a record loss and debts of more than US$150 billion.

— AFP

TAIPEI, TAIWAN — Taiwan will unveil its first domestically built submarine on Thursday, with the massively outgunned island seeking to bolster its defences against China.

China claims self-ruled Taiwan as its territory, and has in the past year stepped up military and political pressure, ramping up the number of warplane incursions around the island while diplomatically isolating it.

Taiwan has increased defence spending — allotting a record US$19 billion for 2024 — to acquire military equipment, particularly from its key ally the United States, but its quest to obtain a submarine has faced obstacles.

President Tsai Ing-wen — strongly opposed by Beijing for her refusal to accept China’s authority over the island — launched a submarine programme in 2016 with the aim of delivering a fleet of eight vessels.

Construction on the first started in 2020 by the island’s CSBC Corporation, a company specialising in container ships and military vessels, and it will be unveiled by Tsai in the southern port city of Kaohsiung.

Carrying a price tag of US$1.5 billion, the submarine’s displacement weight is about 2,500 to 3,000 tons, with its combat systems and torpedoes sourced from the US defence company Lockheed Martin.

“The submarine will have a fairly significant impact on Taiwan’s defence strategy,” said Ben Lewis, a US-based independent analyst who focuses on the Chinese military’s movements around the island.

“The biggest risk is to the PLA’s (People’s Liberation Army’s) amphibious assault and troop transport capabilities,” he told AFP, referring to China’s military.

“They have practised extensively the use of civilian vessels to augment their existing troop delivery platforms, and a submarine could wreak havoc on vessels not designed for naval warfare.”

The submarine will still need at least three years to become operational, said Zivon Wang, a military analyst at Taipei-based think tank the Chinese Council of Advanced Policy Studies.

“The launch… does not mean that Taiwan will become very powerful right away but it is a crucial element of Taiwan’s defence strategy and a part of our efforts to build deterrence capabilities.”

China’s state-run Global Times on Monday published an op-ed saying Taiwan’s submarine deployment plan to block the PLA was “daydreaming”.

“The plan is just an illusion of the island attempting to resist reunification by force,” it said.

Last week, China flew 103 warplanes around Taiwan, which the island’s defence ministry said was among the highest in recently recorded incursions, decrying the “destructive unilateral actions”.

Beijing has also sent reconnaissance drones to the eastern side of Taiwan — a move that analysts have said could spell trouble for the island’s military bases there.

— AFP