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Ben Wang, of Jamieson Coote Bonds in Sydney, also agrees that the default is coming. "Given the large size of its balance sheet, Evergrande is deemed as a systematic risk to the Chinese financial system: the authorities cannot afford to let it fail abruptly.
It also implies a distinct risk that the Chinese authorities make the same mistake as the Fed under Alan Greenspan 23 years ago, and unwittingly create the conditions for one last disastrous bout of speculation, despite having precipitated the pressure on Evergrande
Total real estate sales were 16tn yuan ($2.5tn) in 2019, or 10% of the country's entire economic output. A disorderly failure of Evergrande would represent a serious risk to the whole Chinese economy, with the risk of contagion in the rest of the world.