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Evergrande Crisis : A blessing in disguise?




The Chinese economy and financial sector have been boosted greatly by the real estate sector for nearly two decades. In recent years, however, the segment has become connected with excessive debt.
Evergrande is one of the largest real estate developers in China. It has more than $300 billion due to lenders, of which repayments of $850 million are due in the next three months. Global credit rating agency Fitch Ratings has downgraded Evergrande along with other Chinese developers, and a default by the real-estate giant can impact China’s real estate sector on the whole.
What happened with the Lehman Brothers in 2009 was catastrophic for all countries, including India. A similar situation is being seen with China’s Evergrande. With the interconnected nature of economies and markets, this crisis has certainly had effects on the Indian startup ecosystem.
“Given the uncertainty surrounding China, private market investors could increase their focus on India. The Evergrande situation followed months of uncertainty as emerging as well as established startups were impacted by the Chinese government’s policy changes,” says Viraj Nanda, CEO, Globalise, a global-wealth management platform.
However, according to some people, China’s crisis might well drive foreign investors towards India. Also, the Indian government’s constant support of small startups has proven to be stoic. Just as Xi Jinping kneecapped the tech ecosystem, sending venture capital funds India’s way, so too it might come to be with China’s real estate sector. – Evergrande Crisis