Evergrande’s balance sheet is also less complex and less interconnected with the broader financial system than Lehman’s. Lehman’s liabilities when it went bankrupt were equal to 4.2% of the US’ 2007 GDP, while Evergrande’s liabilities at the end of June equaled almost 1.9% of China’s 2020 GDP, according to Bloomberg.
The more important question is whether Evergrande’s collapse will force policymakers to reverse the tightening measures designed to break the economy’s addiction to housing.Impending debt defaults by Evergrande are not China’s “Lehman moment” regulators have the capability to control systemic risk.
