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With Property Sales Plunging, China Evergrande Faces More Protests

Protesters gathered outside China Evergrande offices in Guangzhou on Tuesday to demand that the indebted property developer give them their money back, as the company’s sales across China continued to plunge.

Evergrande, the world’s most indebted property developer, has tried for months to signal to home buyers, employees and investors that its $300 billion debt problem was under control. Just last week its billionaire founder pledged to restart construction on its many stalled sites.

But the challenges keep mounting.

On Tuesday, Evergrande said that property sales fell 39 percent last year compared with the previous year, and that it had been ordered to demolish dozens of buildings on the tropical island province of Hainan because of an administrative penalty from local authorities. The company did not say why it had gotten this penalty or exactly what it would do, other than that it would “resolve the issue properly.”

Evergrande has become a symbol of the difficulties facing China’s economy and its once-thriving property sector. After expanding and borrowing at breakneck speed, Evergrande has struggled to find the cash it needs for overdue bills, outstanding loans and back wages for the workers who have built millions of its apartments across China.

Last spring, Evergrande turned to many of its employees and their family members for money that it packaged as high-interest loans as part of its wealth-management unit. Some of those investors and employees gathered on Tuesday morning outside Evergrande offices in Guangzhou to demand repayment.

Videos and photos showed a heavy police presence and angry protesters chanting, “Evergrande, give me my money back!” In October, employees joined home buyers and Evergrande contractors in protesting in front of provincial government offices and company headquarters in southern China. Those protests were quickly quashed by local police.

A construction site for the Evergrande Mansions, in Dongguan, China, last year.Credit…Gilles Sabrié for The New York Times

Evergrande’s troubles are partly a result of Beijing’s decision to crack down on the borrowing habits of China’s biggest corporate players by restricting their access to bank loans. Like many Chinese developers, Evergrande was still able to drum up cash amid the crackdown by preselling unbuilt apartments.

But its enormous liabilities eventually scared off many home buyers, sending a chill throughout the property market. Out of cash and out of time, Evergrande now owes more than a million apartments to home buyers who have already put money down.

The company entered into default in December after missing a key deadline to pay foreign investors, and it has billions of dollars in foreign bond payments coming up over the next few months. While it has not yet acknowledged the default, in a filing to the Hong Kong Stock Exchange on Tuesday, the company said it would “continue to actively maintain communication with creditors.”

Investors on the Hong Kong Stock Exchange were briefly optimistic on Tuesday when Evergrande resumed trading shares after a one-day suspension. Shares were up by more than 9 percent in the first few minutes of trading before the enthusiasm waned, and shares finished at a more modest 1 percent increase.

Investors appear to be waiting for word of a possible restructuring. Government officials have joined a risk committee created by Evergrande in December to help steer the company. Since then, Evergrande has promised to start construction on hundreds of stalled development projects, yet it has not explained where it will find the money to do so.

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