Chinese developer goes bankrupt

Photo: Dave Levy

Zhejiang Xingrun Real Estate Co. ower 2.4 billion yuan to 15 lenders, including the China Construction Bank. Unable to pay off its debts, the developer's bankruptcy was confirmed to the media last week, while the firm's owner was reportedly detained for "illegal fund raising", reports the World Property Channel.
 
Now, others are expected to follow suit, with Wa-fong, the CEO of Hong Kong-listed Powerlong, telling the press: "It'll be quite normal if 20 percent of property firms die this year."

Investors were previously keen to buy into the companies through cheap bonds, enjoying the growing value of the Chinese yuan. The country's currency, though, has weakened, causing stocks to slide.

Some, though, are arguing that defaults of companies may be a good thing, given the high number of developers in the country (60,000) has led to a crowded sector.

China's property market remains one of the biggest contributors to its economy.