Zhongzhi Enterprise Group declared itself insolvent with debts of $64 billion – Kommersant

Chinese investment conglomerate Zhongzhi Enterprise Group announced its insolvency in a letter to investors. As indicated in the letter about which reports Caixin Global publication, the audit revealed a shortfall of up to $36.5 billion, and the company’s debts are estimated at between $59 billion and $64.6 billion. This amount is more than twice the group’s assets.

Zhongzhi Enterprise Group, one of China’s largest investment companies, was founded in 1995. It provides wealth management services and its investments are largely in the real estate sector. The company has repeatedly been in the spotlight due to its aggressive expansion policy and high-risk investments. The business situation of Zhongzhi Enterprise Group began to deteriorate in 2019 amid tightening government regulation of the financial sector. The problems were aggravated by the protracted real estate market crisis, which led to the collapse of several large Chinese developers. In June 2023, several units of Zhongzhi Enterprise Group failed to pay investors.

The letter to investors said that “a number of attempts were made to save” the company, but “all of them came to nothing.” Experts interviewed South China Morning Post, note that since China’s financial companies are closely linked to the real estate sector, its collapse will most definitely lead to a wave of collapses of banks, trust and insurance companies. However, some experts say the situation with Zhongzhi Enterprise Group “does not pose a systemic threat to the real estate sector or the broader financial sector.”

Alena Miklashevskaya