Evergrande’s Real Estate Model Illustrates the Risks of High-Leverage Expansion
CategoryNews Briefs
After the short-seller report was published, a flood of financial institutions halted and cut off lending. Combined with sluggish post-pandemic sales and a stock plunge, the company's high debt burden generated over a billion yuan in new interest daily. Commercial acceptance bills—which once traded at par—were now offered at just a 30% discount and still found no takers. Within a year, layoffs reached 30%, and average compensation plummeted 60%: the workforce shrank from 160,000 to 110,000, and average annual pay dropped from ¥160,000 to just over ¥20,000.