China's Evergrande chairman put under police surveillance

Evergrande's chairman Hui Ka Yan has been put under police surveillance as the problems for the Chinese property giant mount.

Evergrande said its shares would remain suspended until further notice.

It marks another low for the heavily indebted property giant which defaulted in 2021, triggering China's current real estate market crisis.

In August, it filed for bankruptcy in the US in a bid to protect its American assets as it worked on a deal.

In a statement on Thursday, Evergrande said Mr Hui "has been subject to mandatory measures in accordance with the law due to suspicion of illegal crimes", without giving any further detail.

The latest share suspension comes just a month after the firm's previous 17-month suspension was lifted.

Evergrande - once the world's most valuable property developer - is at the centre of a real estate crisis threatening the world's second largest economy.

With more than $300bn (£247bn) of debt, the firm has been scrambling to raise cash by selling assets and shares to repay suppliers and creditors.

Most of Evergrande's debt is owed to people within China, many of whom are ordinary citizens whose homes have not been finished.

When the firm defaulted on its huge debts in 2021, it sent shockwaves through global financial markets as the property sector contributes to roughly a quarter of China's economy.

Several other of the country's major developers have defaulted over the past year and many are struggling to find the money to complete developments.

Hui Ka Yan, also known as Xu Jiayin, was born into a poor family in China's central Henan province in 1958, during Mao Zedong's economic and social campaign, the Great Leap Forward.

Despite his upbringing, after setting up Evergrande in 1996, he became a poster child for China's super-rich.

He earned the nickname "Belt Brother" in 2012 by wearing a gold-buckled belt from the French luxury label Hermès to China's annual legislative conference.

In 2017, he became China's richest person with his fortune rising to $42.5bn (£34bn).

But his wealth has plummeted since then, largely as Evergrande's problems have grown, and he has kept a low profile in recent years.

There are several reasons why Evergrande's problems are serious.

Firstly, many people bought property from Evergrande even before building work began. They have paid deposits and could potentially lose that money if it goes bust.

There are also the companies that do business with Evergrande. Firms including construction and design firms and materials suppliers are at risk of incurring major losses, which could force them into bankruptcy.

The third is the potential impact on China's financial system: If Evergrande defaults, banks and other lenders may be forced to lend less.

This could lead to what is known as a credit crunch, when companies struggle to borrow money at affordable rates.

A credit crunch would be very bad news for the world's second largest economy, because companies that can't borrow find it difficult to grow, and in some cases are unable to continue operating.

This may also unnerve foreign investors, who could see China as a less attractive place to put their money.

In July, Evergrande revealed it had lost a combined 581.9bn yuan ($79.6bn; £65.6bn) over the past two years.

It has been working on a new repayment plan and the company seemed to have been moving closer to resolving the problem after it filed for US bankruptcy protection.

Its latest plan was to reissue its overseas debt as new bonds that it had to pay back in about 10 years' time, as well as offering their creditors stakes in the company as shares.

But earlier this week, Evergrande revealed its mainland unit Hengda Real Estate had defaulted on 4bn yuan of debt.

Chinese business wire Caixin also reported that several current and former executives has been detained.

Trading in its two other units - property services and electric vehicles - was also suspended on Thursday.

"China's property-sector stress will continue to pose cross-sector credit risks in the near term," wrote Lan Wang and Duncan Innes-Ker of Fitch Ratings.

"The government's modest policy easing to date is unlikely to drive a sharp turnaround in homebuyers' sentiment, even though it has led to some recent improvements in broader economic indicators," their report said.