26th November 2023 – (Hong Kong) Chinese authorities have initiated an investigation into Zhongzhi Enterprise Group, a financially distressed conglomerate, following its declaration of insolvency. The investigation was announced by the police in Beijing, where the group is headquartered, late on Saturday. The nature of the alleged offences was not specified, but the authorities have taken action against multiple suspects.
According to local media reports, Zhongzhi issued a letter to investors on Wednesday, revealing its insolvency and disclosing a staggering debt of nearly $66 billion. The company had played a significant role in financing real estate projects during China’s booming property market.
Investment bank Nomura estimates that Zhongzhi managed assets worth over one trillion yuan ($141 billion). However, the conglomerate has fallen victim to the current real estate crisis in China, leaving it unable to meet its obligations to investors.
The bankruptcy of Zhongzhi raises concerns about the potential wider implications for China’s financial system. This development comes in the wake of the ongoing struggles faced by Evergrande, a prominent property developer. The ripple effects of Evergrande’s troubles have already had a profound impact on the real estate sector and the overall economy of China.