China property giant Country Garden warns of up to $7.6bn loss

Country Garden, which is one of China's biggest property developers, has warned that it could see a loss of up to $7.6bn (£6bn) for the first six months of the year.

The announcement is the latest sign of the major issues faced by the world's second largest economy.

This week official figures showed China had slipped into deflation for the first time in more than two years.

Exports have also fallen sharply, while youth unemployment is at a record high.

Shares in Country Garden Holdings were down by more than 5% in Hong Kong trade on Friday afternoon.

Country Garden "is expected to record a net loss ranging from approximately RMB45 billion [$6.24bn; £4.9bn] to RMB55 billion for the six months ended 30 June 2023," the company said in an announcement to the Hong Kong Stock Exchange.

The expected loss compares to a $265m profit for the same time last year.

The firm also said it has set up a special task force, headed by its chairman Yang Huiyan, to find ways to turn the business around.

Earlier on Thursday, rating agency Moody's downgraded the company's rating, citing "heightened liquidity and refinancing risks".

It came as China faced a number of economic challenges, which have raised questions about the pace of its post-pandemic recovery.

Earlier this week, official figures showed the country's exports fell by a larger-than-expected 14.5% in July compared with a year earlier, while imports dropped 12.4%.

Youth unemployment, which is at a record high, is also being closely watched as a record 11.58 million university graduates are expected to enter the job market this year.

On Thursday, US President Joe Biden said China's growing economic issues make it a "ticking time bomb."

At a fundraising event in the western state of Utah, Mr Biden also said "China is in trouble" as he highlighted its high unemployment and aging workforce.

The country is also tackling ballooning local government debt and challenges in the housing market.

Last month, Evergrande, which was once China's biggest real estate firm, revealed that in 2021 and 2022 it lost a combined $81.1bn.

It came as the firm, which defaulted on its debts in late-2021, reported its long overdue earnings to investors.

Evergrande has been struggling with an estimated $300bn of debts.

The huge losses highlight how much the developer was rocked in recent years by the property market crisis in China.

Problems in China's property sector - which includes everything from building homes to industries making white goods that go in them - can have a major impact on the country as it accounts for around a third of the economy.