Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
The Reserve Bank of Australia is keeping a watchful eye on how the crisis surrounding property developer China Evergrande Group evolves.
Once China’s top-selling property developer, Evergrande is at risk of defaulting on its bonds, which has unsettled global stock markets fearing a “Lehman moment” that sparked the 2008-2009 global financial crisis.
RBA deputy governor Guy Debelle told federal politicians the central bank was spending a fair bit of time watching events unfold.
“My assessment is how this evolves is very much in the hands of the Chinese authorities,” Dr Debelle told the House of Representatives economic committee on Wednesday.
“It’s a question of how they want to deploy that power and that’s a question I don’t have an answer to.”
He expects markets will get a better sense of what China would like to happen in the next week or so.
But Dr Debelle also gave a warning of past experiences.
“If you have a lot of balls in the air, sometimes you might drop one,” he said.
“If you look at how countries have dealt with financial issues in the past, you often see a misstep which can have severe consequences.”
“Whether that’s what’s going to happen this time around, I don’t know, bit it’s a possibility. But at the same time I feel (China has) a pretty good handle on what the state of affairs is.”
A major test for China Evergrande comes this week.
The firm is due to pay $US83.5 million ($A115.3 million) in interest relating to its March 2022 bond on Thursday.
It has another $US47.5 million ($A65.6 million) payment due on September 29 for March 2024 notes.