Summary of ¿Qué está pasando en China con Evergrande?

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00:00:00 - 00:15:00

The video discusses the recent financial troubles of the Evergrande Group, one of the 500 largest companies in the world. The company is facing a liquidity crisis and has warned that it may not be able to pay its debt in the future. The author attributes Evergrande's problems to the country's overall debt levels, which have increased dramatically in recent years.

  • 00:00:00 The Chinese giant, Evergrande, is wobbling and threatening to default on a debt of 300 million dollars. Evergrande is one of the 500 largest companies in the world, providing direct employment to 200,000 people. The company is also estimated to provide indirect employment to four million people. Evergrande currently has 1,300 projects in progress in 280 Chinese cities. It is also diversifying into sectors such as electric cars, football, and leisure tourism. Evergrande has a serious liquidity problem, as it does not have enough cash to cover its debt. It is not finding lenders willing to refinance its debt or investors interested in buying its assets. This liquidity crisis is connected to the company's 20-year history of expanding rapidly by relying heavily on debt. Evergreen has accumulated total liabilities of 300 billion dollars. Evergrande has warned that it may not be able to pay its debt in the future. Evergrande's unsustainable growth over the past 20 years was mainly fueled by its export-driven, highly competitive sector. However, this export-driven growth is now coming to an end. As a result, the Chinese banking system is Evergrande's main creditor,
  • 00:05:00 In this video, Chinese authorities discuss how they have changed their economic growth strategy in order to focus on domestic production instead of exports. This change has led to a decrease in China's foreign reserves, and a consequent decrease in the country's ability to fund expensive, external investments. As a result, China's economic growth rates have slowed down in recent years, and the country's debt levels have increased dramatically. This has the potential to cause a financial crisis, as the country's debt-financed investments often go bad.
  • 00:10:00 In this YouTube video, Chinese authorities announce that they are begining to reduce the interest rates on the bank's popular and central banks in order to stimulate endogenous debt growth in this graph you can see as the central bank's interest rates stayed relatively high between 2011 and 2014, which is when quantitative easing was at its full performance and then began to decline from 2014 onwards, when the tape link started to have its effect and therefore China began to rely internally on its debt instead of relying on foreign financial capital to come in 2014, the central bank's interest rates dropped from 6 percent to 4.35 percent coinciding with that continuity of private over-indebtedness within China, since the runaway growth of Evergrande during the last years is only one of the consequences of this debt-fueled economic cycle in China, bad investments by Evergreen are only the consequence of this monetary policy, ultra-expansive within China to artificially stimulate its growth, Evergreen is not the only serious issue that China is going to have to face during the next years and if there are significant internal investments bad, the Chinese financial system will inevitably suffer because who has financed the essential parts of this all, is the Chinese banks, this means that the Chinese financial system will break and China will
  • 00:15:00 In this video, the author discusses recent developments in China, including the scandal surrounding Evergrande Group.

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