Stock Futures Creep Up Ahead of Tech Earnings
Wall Street JournalDec 28, 2021
The Facts
Bloomberg News reported Wednesday — citing unnamed sources familiar with the matter — that Hui Ka Yan, the billionaire chair of China's Evergrande Group, has been put under police control in his home country.
He was allegedly taken away earlier this month and put under so-called residential surveillance — a police action that falls short of formal detention and doesn't imply criminal charges — for reasons that remain unclear.
The Spin
Anti-China narrative
This report raises doubts about the future of the highly indebted Chinese property developer as fears of its collapse grow. With Hui's freedoms limited, the company may not survive long if the refinancing channel remains shut for a prolonged period. A failed Evergrande could spill over into other parts of the economy, leading to China's own Lehman-style crisis.
Pro-China narrative
While Western media keeps trying to promote Evergrande's case as if its potential collapse would negatively affect China's economic prospects, the fact is that such claims expose just how little they understand the Chinese development model. As Evergrande has engendered this crisis by not following Beijing's directions, the group must shoulder its responsibility without a bailout.