The ADB chief told Reuters that China had the tools to avoid the Evergrand crisis

Reuters File Photo: Asian Development Bank President-elect Masatsugu Asakawa speaks during an interview with Reuters in Tokyo, Japan on November 29, 2019. Photo taken on November 29, 2019. Router / Kim Kyung-hun

By Leica Kihar

TOKYO (Reuters) – China has enough buffers and policies to prevent China-based developer China Evergrand Group from creating a global financial crisis, Asian Development Bank President Masatsugu Asakawa said on Tuesday.

But Evergrand’s plight underscores the role that resource inflation has played in China’s rapid growth and could have consequences for the finances and use of regional governments.

“I don’t think any one firm’s episode will cause a global crisis like the one caused by the collapse of Lehman Brothers,” Asakawa said in an online briefing.

He said Chinese authorities were ready for any spike as a result of the possible collapse of Evergrand and that the central bank was providing short-term liquidity to the market.

Evergrande had enough asset holding that it could unload to make payments.

Developers’ grievances highlight the Chinese economy’s widespread dependence on the red-hot property market, which was similar to Japan’s wealth-inflation bubble from the late 1980s to the late 1990s.

The property market crash could hurt China’s regional governments and families who rely on real estate holdings to finance real estate.

Asakawa, Japan’s top currency diplomat, said, “We need to watch the developments carefully because the impact on China’s regional government’s financial and household spending is a cause for concern.”

With a debt of ০ 3,005 billion, Evergrand has raised concerns that its problems could spread through China’s financial system and be reconsidered around the world – although so far property damage has been concentrated.

Asakawa said China could resume moderate growth from 2022, including structural problems such as growing private- and public-sector debt that put pressure on its economy.

“China will continue its moderate long-term growth trend from 2022. It will not revert to the pace of expansion-% expansion during its high-growth period,” he said.

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