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Protesters march while carrying placards and chanting slogans in the "Feminists March Against Femicide" in Kenya.
Hard Numbers: Kenyans march against femicide, Corruption costs Ukrainian defense, Germans protest far right, Evergrande tries to avoid liquidation (again), Say more than ‘Oui’ to Paris!
14: So far this year, 14 women have been murdered as a result of gender-based violence in Kenya, and thousands took to the streets in Kenya’s capital, Nairobi, on Saturday in response. Nearly a third of Kenyan women face physical violence at some point in their lives, while 13% are victims of sexual violence, according to a 2023 government report.
40 million: The country’s security service, SBU, says five employees from a Ukrainian arms company have been charged with conspiring with officials to embezzle nearly $40 million from defense coffers. The money, meant for buying mortar shells to aid the fight against Russia, has been seized and returned to the defense budget. But the incident signals how Ukraine’s battle against corruption continues.
100,000: Protests were held in 30 German cities on Saturday, with up to 100,000 people demonstrating against far-right extremism in Deutschland. The protests – coincidently held on International Holocaust Remembrance Day – were a rebuke of the anti-immigrant rhetoric peddled by the increasingly popular Alternative for Germany party, or AfD, just months ahead of three major regional elections in eastern Germany where the AfD tends to do well.
$300 billion: A court in Hong Kong ordered Chinese property development giant Evergrande to liquidate as it struggles to restructure debts to service over $300 billion in liabilities. It is unclear whether China will allow foreign investors to seize Evergrande assets, and there are fears of major ramifications for the Chinese economy as a whole.
A2-B1: If you dream of moving to Paris, you’ll need to dust off your Petit Larousse and embrace the subjunctive. While French competence was previously only required for those seeking French citizenship, a new law passed on Saturday requires anyone applying for multi-year residency to prove they understand French at the A2 level (advanced beginner). And a 10-year residency card now requires a B1 (intermediate) level of proficiency.Aerial photo shows a residential area of Evergrande in Nanjing, East China's Jiangsu Province.
Evergrande’s last stand delayed
Embattled Chinese property developer Evergrande Group was meant to be in a Hong Kong court today, facing the once-unthinkable prospect of liquidation. The real estate colossus, which owns 1,300 projects in over 280 cities across China, has seen its shares plummet by 99% after the company defaulted on its $300 billion debt in 2021.
Since then, lawyers have come before bankruptcy judge Linda Chan seven times to attempt a restructuring, without success. She had indicated this was likely their last hurrah, but the developer was unexpectedly granted an adjournment on Monday to Jan. 29, 2024, giving it more time to finalize a revamped offshore debt-restructuring plan. If they fail, bankruptcy would have huge repercussions for shareholders, property owners, and the Chinese economy.
Shareholders: Unwinding Evergrande’s business structure could take years and provide little return for investors. The group has three companies listed on the Hong Kong Stock Exchange, including its holding company, as well as thousands of subsidiaries in China in a range of industries, such as electric vehicle manufacturing, life insurance, and sports entertainment.
Homeowners: Across China, an estimated 1.5 million Evergrande customers have been saddled with unfinished homes. In a country where real estate accounts for 80% of household wealth and 30% of the economy, the concern is that Evergrande is simply “too big to fail.” To staunch the bleeding, Beijing’s regulators have drafted a list of 50 developers eligible for financing support.
Financial institutions: Evergande’s troubles have produced a “contagion effect” from real estate development to real estate financing and a similar crackdown by authorities in that sector. Police are now investigating Zhongzhi Enterprise Group, a major shadow bank in China that lent billions of yuan to developers and is now insolvent with up to $64 billion in liabilities.
Hui Ka Yan, chairman of Evergrande Real Estate Group Ltd, at a news conference in 2016.
From Evergrande to Nevergrande?
Troubles are growing for Chinese property development giant Evergrande. Last Thursday, trading of the company’s shares and those of two subsidiaries was suspended, and authorities accused Evergrande Chairman Hui Ka Yan of “illegal crimes.” Evergrande’s stock price has now plunged by 99% from its peak amid concerns that the company will not be able to restructure and repay its $300 billion debt after filing for bankruptcy protection in August.
Observers believe Hui’s lavish lifestyle – he flaunted a yacht, jets, and an estimated $42.5 billion fortune – displeased President Xi Jinping as Evergrande’s financial woes damaged China’s economy and created potential for social unrest.
This past year, thousands of Evergrande purchasers stopped paying their mortgages, while others organized protests as the embattled company paused construction on hundreds of projects. Multigenerational families who pooled their savings to buy property fear being left “with nothing” while young couples are delaying home purchases. They are not just angry with Evergande, but with the government they believe allowed this crisis to happen. Hence, Beijing is cracking down.
What’s next? Evergrande has been trying to get creditors' approval to restructure offshore debt worth $31.7 billion. Due to the regulatory investigation announced last week, it cannot issue new debt, putting those plans in jeopardy. A major group of Evergrande offshore bondholders now plan to join a liquidation petition, which will be heard in Hong Kong on Oct. 30, unless Evergrande can present a new restructuring plan before then.
Observers believe it is unlikely Beijing will intervene to prop up the company. But the government may move to liquidate Evergrande, as it has done with other failing businesses, though none on this large a scale. Such an action would take Evergrande’s debt down to zero, causing huge losses to its overseas lenders.Refugees from Nagorno-Karabakh region ride in a truck upon their arrival at the border village of Kornidzor, Armenia, September 27, 2023.
Hard Numbers: Armenians flee Nagorno-Karabakh, GOP debate falls flat, Evergrande stock drops, tragedy strikes Iraqi wedding, Commander strikes again
50,000: A torrent of at least 50,000 ethnic Armenians have fled Nagorno-Karabakh after Azerbaijani forces occupied the hotly contested enclave last week. The refugees constitute approximately one-third of the pre-war Armenian population. Among those fleeing was Russian-Armenian billionaire Ruben Vardanyan, who Azerbaijan’s border guard service said Wednesday it had arrested.
200,000: A 30-second spot at last night’s Republican debate ran advertisers around $200,000 – not cheap, but less than half the $495,000 the same time slot cost during the first debate. The network clearly expected fewer viewers to tune in for the second round, probably because polls show the lion’s share of GOP voters know they will back Donald Trump.
19: Massive Chinese property developer Evergrande saw its stock price fall 19% on reports that its chairman has been placed under police surveillance. The company has lost an astonishing 99.9% of its value since a 2017 peak and is in the midst of a government-supervised restructuring, fueling fears of liquidation.
100: Over 100 people died and scores more were injured late Tuesday when a fire swept through a wedding party in Qaraqosh, a small town in Iraq's Nineveh region. It is just the latest tragedy to strike the tight-knit community of Assyrian Christians — one of the most ancient ethnic groups in Iraq — which was forced to flee between 2014 and 2017 by the Islamic State.
11: President Joe Biden’s dog Commander has bitten yet another Secret Service agent in the 11th known incident in which the canine has harmed people at the White House. Biden’s other dog, Major, was sent to live with friends in Delaware after displaying similar aggression, but he's not the only president to have had a misbehaving pet: America’s most animal-crazy president, Teddy Roosevelt, notoriously had a badger named Josiah who bit legs constantly – “but never faces,” according to the president’s son Archie.View of a signboard of Evergrande Group in Ji'nan city, east China's Shandong province.
From developers to defense leaders, China’s disappearing elite
Why do Chinese officials keep vanishing? On Saturday, several executives of the beleaguered property developer Evergrande Group were arrested in the southern city of Shenzhen, where the conglomerate is headquartered. It is unclear how many persons were detained, or their names or titles, though a statement by local police referenced one individual named “Du.” There is speculation that this individual is Du Liang, who in 2021 was listed as head of Evergrande’s wealth management unit.
Evergrande made headlines in Aug. 2023 when it filed for US bankruptcy protection, and is currently undergoing a restructuring plan for its $340 billion debt. On Friday, China’s national financial regulator announced it had approved the takeover of Evergrande’s life insurance business by a new state-owned entity.
These arrests come on the heels of the disappearance two weeks ago of China’s defense minister, Li Shangfu. According to US officials, Li is under investigation for corruption along with eight senior officials who worked in a military procurement unit that he led from 2017 to 2022. Beijing, however, is staying mum: On Friday, a Chinese Foreign Ministry spokeswoman said she was “not aware” of the situation.
These incidents, as well as the recent removal of Qin Gang as Chinese foreign minister and a shake-up at the top of the country’s nuclear forces, have led to speculation that President Xi Jinping is conducting a purge within China’s defense apparatus. If so, it remains to be seen whether that reflects squabbling within the Chinese elite, a more general consolidation of Xi’s power, or a house-cleaning ahead of some big move by the Chinese president. But a wave of disappearing acts at the top of the world’s second largest economy are not a good sign.NewSouth Bookstore in Montgomery, Ala., displays books that have been banned by some schools, including "Charlotte's Web" and "Captain Underpants."
Hard Numbers: Books attacked, Trump trial looms, migrant children drown off Greece, Evergrande crisis deepens, redheads celebrate
2: Donald Trump’s election-interference trial will begin in March 2024, two years earlier than he and his lawyers had requested. The date selected by a federal judge on Monday means the proceedings will begin right smack in the middle of the Republican primaries — and just a day before Super Tuesday. Trump still holds a commanding lead in the race to be the GOP’s 2024 presidential nominee, but others are gaining a little ground.
4: Four migrant children drowned off the Greek coast on Monday while trying to cross the Aegean Sea from neighboring Turkey in a boat. The dead ranged in age from 11 months to 8 years. Some 12,000 migrants have arrived in Greece by sea this year — in July, hundreds died when a boat capsized.
2 billion: Chinese real estate firm Evergrande, AKA the world’s “most indebted property firm,” lost more than $2 billion in market cap on Monday amid ongoing concern about its ability to pay back its loans. The firm’s fate is intricately tied to broader concerns about China’s economy, which has relied heavily on property investment to boost growth in recent years. See our explainer here.
5,000: Ginger banger alert! Some 5,000 redheads gathered in the Netherlands for the annual Redhead Days Festival, which celebrates pheomelanin pride. Only about 2% of the world’s population has natural red hair.
What We're Watching: Indian farmers stop protesting, Evergrande on brink of default, Saudi camels get touch-ups
Indian farmers pack up their tents — for now. For over a year, tens of thousands of Indian farmers have been protesting three agriculture laws that they say would give more power to big agribusiness and reduce farmers’ incomes. (The government says they rather aim to streamline an outdated and inefficient sector.) Now, farmers’ unions say they will call off the protests — and shut down the makeshift protest camp they built on the outskirts of Delhi — after PM Narendra Modi agreed to their demands. The farmers want the government to set a minimum price for most farm produce, and withdraw criminal charges for farmers arrested during protests. Modi backing down is a big deal because agriculture is the primary source of income for nearly 60 percent of Indians, and dozens of farmers have been killed in confrontations with police over the past year. Protest leaders will meet with government officials on January 15 to assess the plan’s progress. But if the government doesn’t follow through on its promises, the farmers say they’ll go back to the picket line.
Evergrande on brink of default. Fitch became on Thursday the first global ratings agency to declare that Evergrande will likely default on its debt outside China. This means that international creditors can expect to get stiffed by the Chinese property developer, which on Monday missed a final deadline to cough up some $82.5 million to foreign investors. Does this mean that Evergrande will default on all the roughly $300 billion it owes, mostly inside China? The company and the Chinese government won't confirm it, but Evergrande's situation is looking gloomier by the day. Meanwhile, China's central bank has already loosened the rules for banks to keep cash on hand in order to inject some $188 billion into the economy. President Xi Jinping hopes that'll be enough to avoid the credit crunch that an Evergrande default could trigger in China's real estate industry and the broader financial sector amid an already sluggish economy.
Saudi camels get Botox. At the annual King Abdulaziz Camel Festival in Saudi Arabia, contestants are judged by, among other things, the size and shape of their lips, cheeks, heads, and knees. But each year, dozens of the humped mammals get disqualified because their owners inject them with Botox in order to have a better shot at the $66 million in prize money. More than 40 camels were thrown out of the 2021 edition. What’s more, the cheats have gotten more sophisticated by stretching out lips and noses, using hormones to up muscle mass, inflating body parts with rubber bands, and using fillers to relax tense faces. Think this story is fake? It isn’t. In fact, we first reported on this cruel trend almost four years ago.
Why is Xi Jinping willing to slow down China’s economy?
China's GDP grew a lower-than-expected 4.9 percent year-on-year in the third quarter of 2021, a whopping three percentage points less than in the previous period. It's a big deal for the world's second-largest economy, the only major one that expanded throughout the pandemic — and now at risk of missing its growth target of 6 percent for the entire year.
Normally, such a drastic slowdown would have put the ruling Communist Party in a tizzy. But this time, Xi Jinping knows this is the price he must pay for his big plans to curb rising inequality and boost the middle class at the expense of the CCP's traditional economic mantra: high growth above all else.
Why is GDP growth slowing down now? For one thing, a combination of rising coal prices, tighter regulations on power consumption related to climate policy, and soaring demand in countries that buy a lot of Chinese-made stuff have all resulted in an energy crunch that'll likely worsen disruptions to global supply chains that rely heavily on China.
For another, Xi's crackdown on excessive borrowing in the real estate sector — which accounts for almost 30 percent of China's economic activity but was so in the red that it posed a systemic risk — is causing a lot of pain. Evergrande and other large property developers are missing deadlines to pay their creditors, and halting projects for homes they've already sold but have no money to build.
Finally, there's the pandemic itself, via strict local lockdowns that have hurt Chinese retail and travel in the only country in the world that still believes in zero COVID.
China's leader thinks that an economic slowdown, however painful in the short term, will be worth it in the long run because the economy needs structural reforms to narrow the income gap and deliver what Xi calls "common prosperity."
In a speech that stunned the business community two months ago, Xi confirmed that "common prosperity" means vastly expanding China's middle class, partly by raising taxes on the rich. He wants some of this wealth to be redistributed in order to make China a more equal society. (Indeed, the 1 percent have seen the writing on the wall — a single mention of regulating "excessively high incomes" prompted several panicked CEOs to immediately donate billions to charity right when Xi was going after the tech sector.)
Xi's goal is for China's GDP to continue expanding, but at a less ambitious pace so Chinese workers have time to earn more and become more productive at the same time. China, he says, should move away from mostly churning out cheap exports that pollute the planet as Chinese factories have done for decades to focus on producing high-quality, sustainably-made goods for the local market.
But it's a risky move. Winding down economic activity to the 2-3 percent annual growth levels of mature economies like the US or Germany will be a tricky balancing act for China. Sluggish growth that drags on could deter investment, and trigger social unrest if unemployment gets too high as a result.
Meanwhile, slower Chinese economic growth will have serious ripple effects for the rest of the world, given China's outsize role in the global economy.
The so-called "factory of the world" will probably continue exporting a lot of stuff, but not as much as it did before, and more of its exports will be high-value tech goods. Local companies will also likely outsource more of their manufacturing to lower-cost neighbors such as Bangladesh or Myanmar, and over time most Chinese-made products will get more expensive.
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