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Evergrande Is The Second Largest Property Developer In The World`s Second Largest Economy; Mass Protests In China. Aired 4-4:10 ET
Aired December 10, 2021 - 04:0:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CARL AZUZ: The forecast for this Friday, 100 percent of awesome. I`m Carl Azuz, thank you for wrapping up the week with us. Financial literacy plays
into our first report today. It concerns the second largest property developer in the world`s second largest economy. That developer is named
It`s based in China. The company is deep in debt, it owes $300 billion. And this week, Evergrande apparently failed to make a required payment of that
debt and that means it`s officially in default. Why is this significant?
Well, Evergrande is huge. It doesn`t just build new houses, it sells cars, it makes bottled water, it helps people manage their money. Evergrande had
to borrow a lot of money in order to expand so quickly, but economic growth across all of China has slowed down and it`s become harder for Evergrande
to borrow more money to fund its construction projects. Even the homes people have already paid to have built.
Evergrande has to make regular payments back to the investors it`s borrowed from. It looks like it`s no longer raising enough money to do that, even
after selling off some of the assets it owns, so now it`s in trouble. Why is this making news outside of China?
If Evergrande falls apart, the other companies it does business with could go bankrupt as well. This Could hurt China`s overall economy and because
that economy is so large, it could have a negative impact on the economies that trade with China, like that of the United States.
Besides selling assets, what has Evergrande done to address its problems? It invited the Chinese government to get more involved in its operations,
but that comes at a cost as well as it further increases the power of China`s communist leadership.
SELINA WANG, CNN CORRESPONDENT: Evergrande with $300 billion in unpaid bills teeters on the brink of collapse. For Chinese leader Xi Jinping, it`s
all part of the plan. Xi is rewriting the rules in the world`s second largest economy.
Getting rich is no longer glorious, neither is growth at all costs. The days of unrestrained borrowing that turned Evergrande and so many companies
into powerhouses are over.
LELAND MILLER, CHIEF EXECUTIVE OFFICER, CHINA BEIGE BOOK INTERNATIONAL: There`s been a decision at the very top that this buildup of reckless
credit expansion is becoming a danger to China and presumably a threat to party rule.
WANG: Evergrande rose the boom of homebuyers rushing to urban cities as hundreds of millions across China were lifted out of poverty, building more
than a thousand developments in hundreds of cities, property supercharge the economy, ballooning to account for as much as 30 percent of China`s
By 2017, Evergrande`s founder, Xu Jiayin, became Asia`s richest person. Evergrande expanded into bottled water, electric cars, even pig farming.
The strategy worked until China`s economy cooled and Beijing started to crack down on excessive borrowing from property developers. Beijing stated
goal to lessen economic inequality as housing prices skyrocketed and to create more sustainable growth.
The stakes are too high for Beijing to let Evergrande fail. Nearly three quarters of household wealth in China are estimated to be tied up in
property. In September, footage circulated of employees, contractors and home buyers protesting Evergrande across China. CNN spoke to multiple
buyers of Evergrande properties. One provided CNN with these videos of people demanding their money back. The buyer told CNN that more than 900
people have paid $340 million for this unfinished housing project that`s been stalled since January.
Angry citizens have flooded online government feedback ports. This homebuyer in Sichuan province asked for all of their hard earned money had
went, begging, "Please uphold justice for your people."
RANA MITTER, PROFESSOR OF POLITICS OF MODERN CHINA, UNIVERSITY OF OXFORD: If you talk to people about what might cause mass protests in China, the
answer you almost always get is it`s not democracy. More and more it`s finance and it`s property.
WANG: Beijing says the situation is controllable, but fears grow of a crisis in China`s real estate sector that ripples into the broader economy.
In recent weeks, a slew of other developers have disclosed their own struggles.
MILLER: When you`re decelerating or popping the property bubble you`re destroying wealth. You`re going to be putting people out of business,
companies out of business. It`s a big deal. It`s why it`s never happened before.
WANG: It marks the end of China`s economic model as we know it.
MILLER: We are going from an area of high to medium growth to an area of low growth in China.
WANG: But Beijing is betting its top down model will make its 1.4 billion people prosperous. The catch, ever more control in the hands of the
party. Selina Wang, CNN, Tokyo.
AZUZ: Ten second trivia, American engineer George C. Devol was best known for his work with what? Robot, washing machines, acoustics or medical
In the 1950s, George C. Devol created Unimate, the world`s first industrial robots.
Seven decades later, as investments in humanoid robots are made, they`re often met with mixed reactions from actual humans. Some praise their
lifelike appearances others see them as unsettling. Emeka is a new robot that doesn`t walk or complete tasks. It`s more of a design project focused
on developing realistic expressions. Human critics have described it as creepy awkward, and quote, nightmare fuel. Creators and supporters see it
WILL JACKSON, FOUNDER AND CEO ENGINEERED ARTS: The reason for making a robot that looks like a person is to interact with people. So face, human
face is a very high bandwidth communication tool and that`s why we built these expressive robots.
AYANNA HOWARD, DEAN OF THE COLLEGE OF ENGINEERING, OHIO STATE UNIVERSITY: It looks very, very realistic. It looks expressive. It almost looks like a
real human but with a weird kind of plastic face.
There are humanoid robots that are functionally more capable in terms of walking, lifting and things like that. In terms of the movement, in terms
of the fluidity of it looking quite humanistic, it`s come to being one of the closest I would say.
Imagine a robot that has the visual expression and the movements of a human therapist that can interact with someone as a mental health expert. And it
could be in a kiosk, in the mall at the airport where you just need someone to talk to and someone to chat with.
With this one, I don`t think we have anything to fear with the human like form factor or anything like that. In fact, I think if anything, we will
enjoy the experience. I think we will use it much more as an entertainment mechanism than as, oh, my gosh, robots are going to take over the world.
AZUZ: Today I learned that there is a color of the year. The Pantone Color Institute, an American design company chooses a shade it thinks will
represent the year ahead. There were two chosen for 2021, ultimate gray and illuminating. For 2022, Pantone has created Very Peri, which an executive
says has joyous attitude, carefree confidence and a creative spirit.
A co-worker of mine said it also harkens back to the Bridesmaids dresses of 1999. So the question is does Very Peri make you merry? Do you find it
light and airy? Would it earn an entry in your very weary diary? Is it beautiful in theory? Is it something you would share? Is it scary like
lactose intolerance avoid the dairy? It`s a rare query that has made his terry like a wrinkle needs ironing out about a color known as periwinkle.
Yes. I wore this shirt intentionally.
I`m Carl Azuz. Today`s shout out goes out to Winfield High School. We mentioned one from Kansas on Tuesday. Today`s goes out to our friends, the
Generals, in Winfield West Virginia.
Join us again on Monday, please, for more CNN.