Evergrande: Why Chinese company's collapse is a ticking timebomb

Evergrande: Why Chinese company's collapse is a ticking timebomb
Evergrande: Why Chinese company's collapse is a ticking timebomb

The spectacular collapse of Chinese property conglomerate Evergrande could spark major issues with the price of Australia's biggest export, iron ore.  

China's second biggest apartment developer - which has 1,300 projects in more than 280 Chinese cities - is already more than two trillion yuan ($AU425billion) in debt.

The conglomerate is struggling to meet key interest payments which are due on Monday.  

China already has a glut of unfinished apartments and towers being blown up because developers often run out of money to finish residential projects, creating 'ghost cities'.

However, experts believe Evergrande's potential demise could cause major shockwaves for the global economy. 

Its possible collapse has been likened to the implosion of 161-year American financial services giant Lehman Brothers during the Global Financial Crisis in 2008.

Should the Shenzhen-based corporate giant sink, so would Chinese demand for Australian iron ore.

The valuable resource has held up strongly as China imposed sanctions on Australian barley, lobsters, beef, lamb, wine and cotton.

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The collapse of Chinese property conglomerate Evergrande is a threat to Australia's biggest export, iron ore (pictured is the halted construction of the Evergrande Cultural Tourism City  retail and residential development at Suzhou near Shanghai in China's Jiangsu province)

The collapse of Chinese property conglomerate Evergrande is a threat to Australia's biggest export, iron ore (pictured is the halted construction of the Evergrande Cultural Tourism City  retail and residential development at Suzhou near Shanghai in China's Jiangsu province)

National Australia Bank chief economist Alan Oster said an oversupply of apartments and Chinese Communist Party government directives to cut back on steel production had already caused a plunge in iron ore prices.

'The long and short of it is it's not just Evergrande, they've been basically trying to slow up some of the excesses in China,' he told Daily Mail Australia.

'It does say as you tighten up the economy, get rid of some of the bubbles there, you don't need as much iron ore.'

As recently as July, iron ore was worth more than $US200 a metric tonne.

But a cutback in

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