Police in China have apprehended multiple individuals employed at Evergrande Wealth Management, a financial subsidiary of the embattled property conglomerate Evergrande, which is grappling with debts amounting to hundreds of billions of dollars, The Guardian reports.
The arrestees' identities and the charges against them have not been disclosed, as stated by authorities in Shenzhen, a southern city in China.
In their statement, the police encouraged the public to report any instances of suspected fraud to the authorities. Evergrande's substantial debt burden has contributed to a deepening crisis in China's property market, raising concerns about potential global repercussions. The property sector, along with construction, constitutes approximately one-quarter of China's GDP and has witnessed a remarkable boom in recent decades.
However, the substantial debt amassed by the industry's major players, including Evergrande, which had an estimated debt of $328bn at the end of June, has been viewed by Beijing in recent years as an unacceptable risk to China's financial system and overall economic well-being.
Since 2020, authorities have progressively restricted developers' access to credit, resulting in a wave of defaults, notably Evergrande's. Another major Chinese property firm, Country Garden, narrowly averted default in recent months, despite reporting a record loss and debts exceeding $150bn.
State-backed developer Sino-Ocean is the latest company to exhibit signs of financial trouble, having announced the suspension of payments for offshore debts on September 15. Meanwhile, Moody's rating agency recently downgraded the outlook for China's property sector from "stable" to "negative," asserting that government support measures would have only a short-term impact.