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Country Garden, once China’s largest private property developer by sales, has revealed a record Rmb48.9bn ($6.7bn) loss for the first half of the year as it battles to survive the liquidity crisis afflicting the country’s real estate sector.

The six-month results released on Wednesday represent the highest ever losses for the group, until recently considered safer than many of its peers. They also highlight the dire outlook for an industry typically responsible for more than a quarter of economic activity in China.

The company’s woes are part of a two-year real estate liquidity crisis that began with the default of developer China Evergrande in 2021 and has shown signs of spilling over into the Chinese investment industry.

As the broader crisis has continued, Country Garden’s losses have grown from Rmb6.7bn for the second half of 2022. By contrast with this week’s results, it had recorded a profit of Rmb612mn for the first six months of last year.

The Guangdong-based group said its revenues in the first half of this year increased 39 per cent to Rmb226bn.

But it added that it had “struck a balance between sales volume and selling price at some of its property projects” to “ensure punctual delivery of finished properties” — an apparent acknowledgment that it had cut prices to shift units.

Concerns over Country Garden’s finances grew this month when it missed coupon payments on international bonds. On Tuesday, the developer asked Chinese creditors for a 40-day grace period on a renminbi bond maturing next week.

Country Garden said it had liabilities of about Rmb1.36tn as of the end of the first half of 2023. It said it would “consider adopting various debt management measures to resolve” what it described as “phased liquidity pressure”.

Beijing cracked down on borrowing by China’s developers early in the coronavirus pandemic, but has been forced to ease its approach as the country struggles to reinvigorate its economy.

In a move that reflected the pressure on authorities, the southern cities of Guangzhou and Shenzhen relaxed mortgage lending conditions for first-home buyers on Wednesday.

Caps on bank mortgage lending were originally part of a wider approach designed to address overheating home prices. A prolonged slowdown has since hit housing prices amid collapsing sales and delays to construction of new apartments.

The government has stopped short of any bailouts, but its approach towards Country Garden is being closely watched.

Chinese developers face a $38bn wall of renminbi and dollar bond payments due over the next four months, according to data from Dealogic.

“Developer defaults will certainly continue as almost all private developers face cash flow pressure that isn’t going away any time soon,” said Bruce Pang, chief economist for Greater China at JLL. “Any policy support that does come will take time to feed through to cash flow, home sales and new construction starts.”

Country Garden had planned to raise $300mn from a share offer in late July, but abruptly cancelled the deal at the last minute.

The developer also announced plans on Wednesday to issue HK$270mn ($34mn) of new shares in Hong Kong at a 15 per cent discount to its closing price on Tuesday, with all money raised to be earmarked for repayment of existing loans.

Shares in Country Garden rose 5.7 per cent on Thursday morning in Hong Kong following the company’s first-half results. The stock is down two-thirds in the year to date, reflecting a loss of more than $7bn in market capitalisation.

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