PBOC Governor Says Evergrande Debt Crisis Will Be Handled in Accordance with Market Principles and Rule of Law

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The head of the Chinese central bank has signalled that it will adopt no special measures to deal with the mounting debt crisis of real estate giant Evergrande Group.

Yi Gang (易纲), governor of the People’s Bank of China (PBOC), said that the risk problems of Evergrande were a “market issue,” and that would be “appropriately handled in accordance with the principles of the market and the rule of law.”

“Creditors and shareholders rights will obtain full respect in accordance with the statutory repayment order,” said Yi on 9 December, at a forum on Hong Kong’s role as an international financial centre.

Yi’s remarks arrive just after Evergrande Group reported to the Hong Kong Stock Exchange last Friday that it was unable to guarantee its repayment of outstanding debt.

“Hong Kong, as a mature international financial centre, has already established a complete set of highly effective financial operating systems, and has clear legal provisions and procedures for dealing with related problems,” said Yi.

“Short-term risk arising in relation to individual real estate enterprises will not impact the normal financing function of the medium and long-term market.”