China's government tries to defuse economic fears after real estate developer's debt struggle

BEIJING (AP) — China’s government is trying to reassure jittery homebuyers after a major real estate developer missed a payment on its multibillion-dollar debt, reviving fears about the industry’s shaky finances and their impact on the struggling Chinese economy.

There is no indication Country Garden’s problems might spread beyond China, which seals off its financial system from global capital flows, economists say. But they highlight the industry’s struggle under pressure from the ruling Communist Party to reduce soaring debt that is seen as an economic threat. That has bankrupted hundreds of small developers and depressed China’s economic growth.

The Country Garden episode has echoes of Evergrande Group, which is trying to restructure more than $340 billion owed to banks and bondholders. Fears of a possible Evergrande default in 2021 rattled global markets, but they eased after the Chinese central bank said its problems were contained and Beijing would keep credit markets functioning. A central bank official said in March financing conditions have “improved significantly.”

Financial markets were rattled when Country Garden Holdings Co. missed two payments totaling $22.5 million due to buyers of dollar-denominated bonds on Aug. 6. It has a 30-day grace period before it would be declared in default.