Amid Debt Crisis, Property Heiress Loses More Wealth Than Any Other Billionaire

An aerial view shows highways and buildings in Shanghai, China, on March 30, 2022. Aly Song/Reuters

China’s crackdown on industry borrowing following the Evergrande-triggered property crisis has taken yet another toll, as Asia’s wealthiest woman, Yang Huiyan’s, wealth tanked by more than half this year, according to the latest revelation of the Bloomberg Billionaires Index.

As China’s property crisis worsened consequent to the government’s tightening of property restrictions aimed at curbing excessive borrowing and speculation, Ms. Yang’s fortunes slumped by 84 percent since June 2021, according to the Index. On Tuesday alone, the drop was 8.2 percent. That’s a reduction of $28.6 billion, leaving the property heiress with a net worth of $5.5 billion.

This is the largest dollar decline among ultra-rich individuals monitored by Bloomberg’s wealth index during this time frame.

Forty-one-year-old Ms. Yang is the CEO of Country Garden Holdings, China’s largest real estate developer by sales. She inherited the company from her father, Yang Guoqiang, who founded it in Foshan, Guangdong Province, in 1992.

Mr. Yang gave her a controlling stake in 2005 after she worked as his personal assistant to learn the ropes, and she eventually succeeded him.

Real Estate Bust

The Chinese real estate crisis worsened following the government’s tightening of property sector laws in an attempt to reduce excessive borrowing and speculation. The so-called “three red lines” policy, implemented in 2020, put limits on developers’ debt ratios, making it difficult to refinance growing loans.

The subsequent financial constraint resulted in unprecedented offshore defaults, the loss of billions of dollars in investments, and the postponement of the construction of thousands of homes.

The declining economy and the impact of the COVID-19 pandemic, which cut demand for houses and harmed potential buyers’ salaries and savings, further contributed to the property crisis. The cash flow issues and default threats of certain big developers, including China Evergrande, who owed creditors, suppliers, and homebuyers more than $300 billion, prompted a loss of confidence in the sector, and a sell-off in the bond and stock markets.

Homeowners had paid deposits or mortgages for unfinished flats, yet faced delays or cancellations of their projects—their unhappiness and protests also led to large-scale mortgage defaults, or demands of reimbursements from the developers.

These factors combined to create a vicious cycle of falling sales, rising loans, and lower property investment, which threatened to destabilize the financial system and the broader economy. Officials attempted to mitigate the issue by offering liquidity assistance to select developers, loosening some limits on property sales, and promising the people that it will safeguard their interests.

However, the situation remains uncertain and challenging. S&P Global Ratings, according to a CNN report, estimated China’s property sales could drop by a third this year because of mortgage strikes, as people believe developers will not be able to complete presold units in time—the most common way they sell homes in the country.

Ms. Yang’s Country Garden, too, has been facing increasing liquidity stress. CNN reported that the developer announced on July 27 it would sell stocks at a nearly 13 percent discount, compared to its Tuesday’s closing price, to raise $361 million (HK$2.83 billion). Country Garden added that some of the proceeds will be used to repay the company’s offshore debt.

Struggling Billionaires

Property tycoons in China responded to the crackdown differently, depending on their financial standing and relationship with the regime. Some tycoons have attempted to work with authorities and comply with restrictions by donating land, lowering prices, or requesting bailouts.

Hui Ka Yan, the chairman of Evergrande Group, for example, had vowed to donate $1 billion to charities and social causes. To avoid default, he also agreed to sell some of his assets and repay some of his obligations.

Some tycoons have also diversified their enterprises and lessened their vulnerability on the real estate sector by investing in other industries or expanding internationally.

Li Ka-shing, the founder of CK Asset Holdings Ltd., for example, has been selling his property assets in mainland China and Hong Kong and investing in the technology, healthcare, and infrastructure industries.  He also owns real estate in Europe, North America, and Australia.

Some tycoons, though, have resigned from their firms and from public life, either voluntarily or under regime coercion. For instance, Zhang Yiming, the founder of TikTok’s parent business, ByteDance Ltd., announced his resignation as CEO in May 2021. He stated that he wished to concentrate on “long-term vision, organizational culture, and social responsibility.” In addition, he gave $77 million to education initiatives in his hometown.

Despite losing more than half of her money, though, Ms. Yang remains Asia’s wealthiest woman, according to the Bloomberg Billionaires Index. However, the drop in her net worth has closed the wealth gap between her and other female billionaires in China, putting Ms. Yang only $100 million away from catching up in wealth by entrepreneur Fan Hongwei, according to CNN.

CORRECTION: An earlier version of this article misstated the current net worth of Haiyan Yang. It has dropped to $5.5 billion. The Epoch Times regrets the error.