Evergrande crisis tests China’s fallout management

HONG KONG, Oct 05 (Reuters): As developer China Evergrande Group lurched from one crisis to another over the past two years, Beijing avoided directly intervening to rescue what was not too long ago considered one of the country's "too big to fail" enterprises.
With the world's most indebted developer now standing at the precipice after authorities launched a criminal investigation into its billionaire founder, some creditors, investors and analysts are now betting on authorities stepping in to manage the fallout.
A messy collapse of the property giant could rip through the already-sputtering economy, with hundreds of thousands of unfinished homes across the country and roughly $300 billion worth of liabilities at home in China alone.
Despite a growing number of Chinese property developers having defaulted on debt obligations since a liquidity crisis hit the sector in 2021, Beijing has not directly stepped in to bail out any firm so far.
The prospects of Evergrande's offshore debt restructuring plan, key to its survival, as well as its overall business have been clouded by the criminal investigation into founder and chairman Hui Ka Yan.
The probe suggests debt revamp efforts led by Hui have been rejected by the central government, which will now step in to take control and formulate new plans, said Xin Sun, senior lecturer in Chinese and East Asian Business at King's College London.