Analysis: Foreign investors are losing out in Evergrande’s battle to survive

In recent days, the property giant has In a stock exchange filing, the developer said that its cash crunch had hurt the operations of Shengjing Bank “in a material way,” and that the lender had demanded that all proceeds from the sale be used to resolve “financial liabilities” between the two parties. Evergrande also recently In recent weeks, international investors have been swayed by fears of contagion from Evergrande and a slowdown in Chinese growth. The situation last month prompted panic in Beijing has few good choices, though. It will want to protect the many Chinese people who have bought unfinished apartments from Evergrande, as well as construction workers, suppliers and small investors. According to recent analysis from Bank of America, Evergrande has sold 200,000 housing units that have not yet been handed over to buyers.The government will also want to limit the risk of other real estate firms going under. At the same time, Beijing has long been trying to rein in excessive borrowing by developers — and it won’t want to dilute that message.So far, experts say that potential outcomes include a Beijing-backed bailout, restructuring or default. China moves to protect consumersIn recent weeks, the government has turned its focus to limiting fallout from the crisis and protecting ordinary people, though it has refrained from commenting on Evergrande directly.In a statement late last month, the People’s Bank of China vowed to “maintain the healthy development of the real estate market, and safeguard the legitimate rights and interests of housing consumers.”While it did not refer to Evergrande specifically, the central bank has been pumping cash into the financial system over the last few days to help stabilize the situation and calm nerves.Last Tuesday, it announced that it had added 100 billion yuan (approximately $15.5 billion) to the system, saying it was to keep liquidity going.Iris Pang, chief economist of Greater China at ING, said that the move was “a symbolic signal to the market, that the Chinese government is in control of the incident, and is not letting the incident become a crisis.”But even if losses for overseas investors are relatively contained, the crisis could force some to rethink how they lend to other Chinese companies in the future, according to Slater.He warned that lenders could “decide to ‘re-price’ China [risks] in the light of their treatment in the Evergrande restructuring, and in the light of what the Evergrande problems tell them about the broader risk/ reward trade-off in Chinese debt.””That in turn depends quite a lot on the exact way the Evergrande restructuring is organized,” he added.— CNN’s Laura He contributed to this report.