China’s debt-hit real estate giant Country Garden reported half-year losses of 48.9 billion yuan ($6.7 billion) in a stock exchange filing Wednesday, as it flirts with a potentially catastrophic default.
One of China’s biggest builders, Country Garden has racked up debts of more than $150 billion and said this month it had failed to make interest payments on two loans.
The group is potentially facing default if it fails to meet a deadline for a bond payment at the beginning of September, which would make it the biggest Chinese real estate firm to crash since rival Evergrande in 2021.
The company’s cash flow problems have ignited fears that it could spread turbulence through China’s economy and financial system.
The rise of the world’s second-largest economy has been largely founded on property and construction, which account for about a quarter of China’s GDP.
The company’s January-June losses were on par with estimates it made in early August of between 45-55 billion yuan.
Over the same period a year ago, the group posted a small profit of 612 million yuan
“The shrinkage of the property sector, coupled with the not yet restored confidence of the capital market, exerted mounting pressure on the Company’s business operation,” Country Garden said in the Hong Kong Stock Exchange filing.
It added that it will “try its best to improve its operating cash flow by ensuring good sales performance, strive to revitalize under-performing assets and reducing inessential administrative expenses”.
