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Detention of China Evergrande founder Hui Ka-yan ‘a signal Beijing won’t let super-rich off the hook’
- Hui ‘underestimated Xi Jinping’s determination’ to deflate China’s property bubble regardless of the impact on the private sector
- Another entrepreneur posted a video to social media on Monday accusing the Evergrande chief of being ‘an enemy of the Chinese people’
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The downfall of Hui Ka-yan, the billionaire founder of troubled property developer China Evergrande Group, indicates deep-seated concern in Beijing over the impact of the country’s super-rich on China’s financial and social stability, Chinese analysts said.
They pointed out that Chinese authorities had not hesitated to move against the businessman – currently under “mandatory measures”, which means detention – regardless of the potential hit to private sector confidence.
Hui, who is known as Xu Jiayin on the mainland, is under suspicion of committing crimes, according to a company statement last Thursday. Several top executives from the company’s wealth management business have already been detained.
The company is already struggling under piles of debt and Hui’s detention has cast doubt on a restructuring plan, raising questions about whether it will survive the crisis.
Evergrande – once China’s largest property conglomerate but now the world’s most indebted developer – has already filed for bankruptcy protection in the United States. The measure shields non-American companies undergoing restructurings from attempts by creditors to sue them or freeze their assets.
Although many lawyers and debt-restructuring accountants believe the bankruptcy protection application is procedural and signals the restructuring negotiations are near their conclusion, critics in mainland China have accused Hui of trying to hide his wealth overseas and avoid paying creditors in the country.
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