Evergrande Suppliers in Hubei Revolting on Loan Repayments

At a time of cases of Mainland China homebuyers suspending their mortgage EMIs spreading across country, it has been reported that Evergrande suppliers in Hubei, China announced that they would revolt on loans payment and halt all working contracts in protest of unpaid bills from Evergrande.

July 15, a “Notice of Suspension of Loans and Works from Evergrande Suppliers and small businesses in Hubei Province” was posted on Internet. The notice was addressed to CCP’s Hubei government and relevant banks.

The notice stated that since July last year, Evergrande failed to pay any due commercial notes, leaving micro, small and medium sized suppliers in Hubei plummeted into a crisis fighting for survival. After a year of struggle, the suppliers are on the verge of bankruptcy. If the regulators cannot offer a solution to the situation, “we will revolt on all loans and unpaid bills, even if that will hurt our credit score.” In addition, the notice stated, “we have gone all-in to fulfil the contract with Evergrande. However, Evergrande ill-used project funding and resulted in stalled projects. Evergrande used commercial note to dodge payments, dragging us into the red. This has caused immense disruption to our lives and we are not able to carry on like this anymore.”

This notice was issued at the time when mortgage revolts are spreading rapidly in the country. As of July, 16th, home buyers of at least 270 unfinished property projects issued statements announcing mortgage revolts which totalled over 1 trillion RMB. State media of Communist China warned that this would trigger “systemic financial risks”. A dozen of banks have issued statements trying to stabilize the situation, and the Ministry of Housing and Urban-Rural Development also had emergency meetings with banks to discuss countermeasures solutions.