Report: China Evergrande Chair Detained for Unspecified Crimes

China’s largest property development company has halted trading after its chairman was reportedly detained.

As the Wall Street Journal reported Thursday (Sept. 28), law enforcement in China believes Hui Ka Yan, chair of Evergrande, may have committed crimes and have apparently detained him as they investigate. PYMNTS has contacted the company for comment but has not yet gotten a reply.

The WSJ said Evergrande had been China’s “most-indebted property developer” before it defaulted on its international bonds in 2021. The company had the equivalent of upwards of $327 billion in liabilities as of the end of June.

It was not clear what the crimes Hui is suspected of are. A separate report by Bloomberg News said the executive, who founded Evergrande in 1996, had been taken away by police earlier this month.

That report noted that the company is at the nexus of a years-long property crisis that has hindered China’s economy. Evergrade has recently called off creditor meetings and is reexamining its plan to restructure debt.

It has also said it can’t meet regulatory qualifications to issue new bonds, while its mainland business failed to pay back an onshore note, the report said.

The WSJ report said Evergrande’s debt crisis triggered a larger calamity in the Chinese housing and construction sector, with dozens of other developers also defaulting. Sales of new homes in China have been in a slump since 2021, with the government stepping in with a variety of measures to help stop the slide.

This year has seen China’s economy struggle in other ways, with reports earlier this year that consumer spending in the country had been slow to get back to where it had been prior to the COVID-19 pandemic.

While the country lifted its pandemic-era restrictions late last year, consumer spending is facing obstacles to its recovery. Among them: the absence of stimulus checks in China, regulations that have done away with 30 million jobs in the short term and 10 million in the longer term, and the aforementioned housing slowdown. 

Some 30 million service sector jobs were eliminated due to COVID-era restrictions as well as by the impact of China’s new regulations on education, technology and property. And while 20 million jobs were expected to return this year and next, another 10 million will remain lost due to those regulations.