For the extremely wealthy in China, especially those who made their fortunes in the nation’s formerly booming real estate market, the previous few years have not been fantastic. Hui Ka Yan formerly held a position among the wealthiest individuals in China and was active in high-level politics. However, the property tycoon’s fortunes have shifted, with his personal worth dropping by 93%, according to the Bloomberg Billionaires Index.
With $300 billion in liabilities, Evergrande is China’s most indebted developer and the cause of the country’s real estate woes since 2021. Hui, also known as Xu Jiayin in Mandarin, utilizedsold his homes, private planes, and money to support his struggling business.
However, that was far from enough, and Evergrande eventually went into default on its US dollar notes in December 2021 after frantically trying to find the money for months to pay back investors, creditors, and suppliers. The company’s failure to deliver its initial debt restructuring plan the previous year raised more questions about its survival.
Evergrande is enormous. In 2020, it generated more than $110 billion in sales, employed approximately 200,000 people, and owned more than 1,300 developments across more than 280 cities.
Failure of Evergrande can be dangerous for the real estate market of China
For a long time, analysts have expressed concern that the failure of Evergrande could lead to greater dangers for the Chinese real estate market, harming homeowners and the larger financial system. The real estate industry and related businesses generate up to 30% of the GDP.
Hui isn’t the only one who has recently witnessed significant financial destruction, though. Last month, Bloomberg reported that Elon Musk, the CEO of Tesla, SpaceX, and Twitter, had become the first person to lose $200 billion in wealth.
Most of Musk’s fortune is invested in Tesla, whose shares fell 65% in 2022. Bloomberg writes that Hui, formerly a significant participant in China’s political scene, is now being avoided. Hui joined the Chinese People’s Political Consultative Conference in 2008, comprised of the most powerful businesspeople and senior government figures. Additionally, as of 2013, he was one of the 300 members of the group’s elite political advisory committee.
His name was also removed from the list of people who would make up the organization for the following five years, and he was instructed not to attend the group’s annual meeting this year. When contacted by Bloomberg for comment, China Evergrande did not respond.
30% of the China’s GDP comes from the real estate
The exclusion of real estate moguls like Hui, who caused problems in the industry by over-leveraging, is not at all surprising. Willy Lam is an adjunct professor at the Chinese University of Hong Kong and the author of many books on Chinese politics. He informed Bloomberg, “The CPPCC job is like an honorable prize that China grants to devoted business people to make sacrifices for the country,” according to Bloomberg.
Analysts, however, are concerned about the larger implications of Evergrande’s precarious status due to Hui’s fall from grace. About 30% of China’s GDP comes from the real estate, and Evergrande has 200,000 employees.
Hui can at least find some comfort in Elon Musk, one of the most well-known businesspeople in the world. Musk, formerly the world’s richest individual, has established the record for the biggest personal wealth loss.