After the world’s most heavily indebted property developer warned over a potential default, the man who built it from the ground up made his first public appearance in weeks.
Hui Ka Yan, the billionaire founder and chairman of China Evergrande, was shown chairing a conference call in a photograph on the company’s social media feed in an attempt to reassure observers that his company would complete its real estate projects.
But neither Hui nor any of his top lieutenants made any public comments to accompany the group’s troubling interim results on Tuesday.
Instead, details of the grave liquidity crisis facing one of China’s most systemically important businesses were spelt out in impersonal financial statements, followed by frenzied trading on bond markets, where Evergrande has borrowed heavily.
Behind the scenes, the role of Hui, whose ambition and connections have helped him forge a vast property development empire with projects in more than 200 cities, will be critical to the future of a company that many fear is teetering on the brink of disaster.
Evergrande, which is under pressure from Beijing to cut its $89bn of debt, has been faced with an almost daily flood of problems since July, spanning pressure from lenders, disputes with contractors and suspensions of its projects.
The fate of the group is of pressing importance not only within, but beyond, China’s financial system, with the prospect of a default potentially rippling across international markets.
Like many of China’s business titans, Hui’s life and personal fortune have mirrored that of the country’s own drastic economic transformation since the 1980s.
Born in 1958 in Henan province, his mother died before his first birthday and his father fought against Japan in the 1930s and 1940s, according to Chinese media reports. After working in the steel industry in the 1980s, Hui launched Evergrande in 1996 in Guangzhou.
Over the following decades, the company’s residential projects cropped up across China’s cities as both the urban population and prices swelled. Hui, who still owns 71 per cent of his group, saw his wealth soar as high as $45bn in 2017.
At the Chinese Communist party’s 13th national congress in 2018, he saluted the contribution of private enterprise to China’s growth just a year after being crowned the richest man in the country by Forbes. “Over 30 years, private enterprises in China have started from scratch,” he said, “from small to large, from weak to strong”.
Hui did not respond to a request for comment for this article.
Evergrande listed in Hong Kong in 2009, its shares rising 34 per cent on its trading debut. But on the bond markets the group soon became a metonym for what some considered the excessive debts associated with China’s real estate boom.
According to Cercius Group, a Montreal-based consultancy specialising in Chinese elite politics, Hui benefited from close connections with Zeng Qinghong, a now-retired politician who was in the 2000s vice-president of China, and his family.
The group has also expanded to own stakes in various businesses beyond real estate, with Hui buying a football club and launching an electric vehicle company, though it has yet to release a vehicle commercially.
In 2015, the Australian government forced the sale of a $31m mansion that had been bought by Hui’s Evergrande through shell companies because of a law that restricted foreigners to purchases of new homes only.
But Beijing, wary of asset bubbles, has in the past year pressured big developers to reduce their debts.
After a listing of Evergrande’s mainland property subsidiary fell through, the group’s problems have escalated. It is now rushing to sell assets, including its electric vehicle stake, so it can generate enough cash to reduce its debts while still completing its projects.
In the past, Hui has had friends in high places, and has enjoyed close relationships with Hong Kong billionaires Joseph Lau and Cheung Chung-Kiu, with whom he plays poker. Lau’s wife in January invested $400m in Evergrande’s electric vehicle subsidiary.
The Chinese government is another matter. In August, top regulators publicly rebuked Evergrande over the need to resolve its debt problems, a month after Hui was photographed at Tiananmen Square during the party’s 100-year anniversary. He also recently stepped down as head of Hengda, Evergrande’s mainland subsidiary, but remains in charge of the group.
“The fact that Hui was extended an invitation to the Party centennial this year means that he is on Xi Jinping’s radar,” noted researchers at Cercius, “which is usually not a good thing”.
Evergrande’s latest financial woes have coincided with a period when extreme wealth — and the individuals who possess it — have fallen out of favour with Beijing, with Xi instead pushing for “common prosperity”.
That shift is intertwined with the humbling of figures such as Jack Ma, who last year disappeared after the shock government cancellation of the $37bn listing of his Ant Group.
Hui, who has in the past hosted Ma at the Guangzhou Evergrande football club he owns, name-checked Ma’s other company, Alibaba, during his 2018 speech.
“The development of private enterprises in China is based on the party’s good policies,” he said at the time. Now, the question is what the party’s future policies mean not only for the fate of his business, but for the remaining $13bn of wealth it has generated for him.
Additional reporting by Wang Xueqiao in Shanghai and Sherry Fei Ju in Beijing