Real estate moguls with a Greece-size debt problem look for hints of relief, even as China’s legislature tries to wean industry off its loans

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Fifteen of the delegates at the ‘two session’s are developers, owning property companies with 2.44 trillion yuan (US$377 billion) of debt between them

All but one of the 15 developers represented are in breach of one, if not all, of the Chinese central bank’s so-called Three Red Lines capital requirements

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The closing meeting of the third session of the 13th National Committee of the Chinese People's Political Consultative Conference (CPPCC) at the Great Hall of the People in Beijing on May 27, 2020. Photo: Xinhua

Pearl Liu

Published: 11:00am, 23 Feb 2021Updated: 4:27pm, 27 Feb 2021

China’s political elite will face a number of political challenges when they gather in Beijing next month for the year’s biggest legislative set piece – the meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference, informally known as the “two sessions”. In this latest part of a series looking at the key items on the agenda, we examine the country’s military spending. You can read part one here.

China’s property developers, who replaced managers of decrepit state-owned factories as the nation’s largest debtors, will be in the hot seat when they show up next week at the Great Hall of the People for their annual legislative meeting in Beijing.

Fifteen of the 5,138 delegates attending the “two sessions” are real estate developers, owning or heading property companies with 2.44 trillion yuan (US$377 billion) of short-term borrowings and long-term loans between them, more than the debt that brought the Greek economy to its knees in 2008, according to calculations by South China Morning Post based on financial filings.

The moguls, the wealthiest of whom is Evergrande Group’s chairman Hui Ka-yan – with US$25.5 billion in estimated fortunes as China’s 14th-richest person – may be in the cross hairs of the legislature, as delegates are expected to march to the government’s beat to maintain financial stability while the economy claws its way out of the coronavirus pandemic.

“They have to present a doable solution at the two sessions, showing how they are going to reduce their debt and what their schedules are,” said Phillip Zhong, senior equity analyst at Morningstar.

“They need to give their word to the central government that they can get there at some point, and will not be the ones that bring systematic risk to the country’s economy, which is the biggest concern of Beijing right now.”

Chinese developers and the central bank's three 'red lines'

That may be a tall order. All but one of the 15 developers represented at the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) are in breach of one, if not all, of the Chinese central bank’s so-called Three Red Lines of capital requirements.

SCMP Series

Two Sessions 2021: what’s on the agenda?

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