As market jitters spread late last month over the state of China’s largest property developer, one source of comfort for some investors was the sheer size of the Evergrande group.
Even in an economy with the scale of China, Evergrande is a behemoth. And it is an heavily indebted one, with total borrowings of about $120bn at the end of June.
That, to many China analysts, makes the Shenzhen-based group too big to fail. It is so intertwined with the country’s banks and financial system that it would be too much of a broader danger to the economy if it defaulted on its debts. And it is not just a question of the size of Evergrande’s borrowings. Its debt is widely held, circulated through shadow banks into retail hands through wealth management products, as well as sitting on bank balance sheets.