By Josh Horwitz and David Kirton

SUZHOU/SHENZHEN, China (Reuters) – At an eerily quiet construction site in eastern China’ Suzhou, worker Li Hongjun says property developer Evergrande’s debt crisis means he will soon run out of food. Christina Xie is an export worker in Shenzhen’s busy southern city. She worries Evergrande might have taken her entire life savings.

These two, who are linked to the huge China Evergrande Group show how difficult it is for the Chinese government to manage its finances. However, economists minimize the possibility of an “Lehman Moment”-style collapse.

Evergrande has outstanding debts totalling $305 billion. Recently, Evergrande stopped paying some suppliers and investors. It also stopped building at various projects in the country. This set off alarm bells around the world about upcoming interest payments.

Li says that he has not received payment since August. He is maintaining minimally among the half-finished apartments, whose outer shells hide the rubble-filled insides. A marble floor with a final finish is covered by concrete slabs and sand.

“In the past two days I’ve been planning to go to the government,” he said. What can I do to help? Soon I’ll have no food to eat. If I have no food to eat I’ll have to go to the government to eat.”

Xie put 380,000 yuan ($58,770) of savings into a wealth management product sold by Evergrande and says she did not receive a payout of 30,000 yuan due to her earlier this month.

It’s my entire savings. The money was meant to support my elderly partner and me. “I worked hard saving money, but now it’s over,” declared Xie. She was informed that her wealth management product would earn 7.5% per year.

Evergrande is China’s largest real estate company… My consultant assured me that the product would yield 7.5% per year.

Xie still hopes to be able to redeem her investment, one of billions of yuan in wealth management products https://www.reuters.com/business/finance/with-gucci-bags-dyson-appliances-evergrande-wooed-retail-investors-2021-09-21 (WMPs) sold by Evergrande, but she is not satisfied with any of the options suggested so far, which include the offer of property.

Evergrande didn’t immediately respond to my request for comment. However, chairman Hui Ka Yan stated at a late night meeting that her top priority was to assist investors in redeeming their products. He also suggested that delivery to home should be made.

PROTESTS

Angry homebuyers and retail investors launched protests in several cities in recent weeks – anathema to China’s stability-obsessed ruling Communist Party.

According to Macquarie property accounts for 40% of Chinese household assets. This means that contagion from an Evergrande-related collapse might reach beyond investors and homeowners to include suppliers and workers.

The sector’s debt crisis has brought an end to the era of borrowing money, which was notorious for creating ghost towns and roads that lead nowhere. [L4N2QP0VF]

Carlos Casanova is senior economist in Asia for Union Bancaire Privee. “It’s important to ensure that Chinese homebuyers receive their homes and that Chinese retail investors are repaid,” Casanova said.

Capital Economics analysts estimated that Evergrande had yet to sell 1.4 million properties and the pre-sale obligations of 1.3 trillion Yuan ($202 billion).

A woman purchased an Evergrande property located in Shenyang, northeast China. She asked to remain anonymous because she has been waiting for it since April 2020.

According to her, she spends 3,000 yuan per month on mortgage repayments for 600,000 Yuan. She also said that the building site has been closed. Evergrande is not likely to meet the Dec. 30 deadline.

A sales manager from Evergrande Wealth previously told Reuters that the WMPs of roughly 40 billion yuan are still outstanding.

More than 80,000 people – including employees, their families and friends as well as owners of Evergrande properties – bought WMPs that raised more than 100 billion yuan in the past five years, the sales manager told Reuters, lured by the promise of yields approaching 12%.

Evergrande’s top executives were summoned last month by regulators. They warned the company to lower its debt and prioritise stability.

($1 = 6.4659 renminbi)