Just two years ago, Yang Huiyan was the mysterious majority stakeholder of a sprawling real estate empire worth billions of dollars.
But in a stunning reversal of fortune triggered by China’s ongoing property woes, she is now locked in a desperate battle to prevent the collapse of the company founded by her father, Yang Guoqiang.
Country Garden is one of the largest developers in China, operating across a range of sectors including construction, property investment, and hotel management.
It is a top-tier player in the space and its growth is a symbol of the country’s economic miracle.
But nearly two years after another property juggernaut, Evergrande started to experience debt problems, Country Garden has revealed it has unpaid bills.
It has a 30-day grace period ending in early September to repay $US22.5 million ($35 million) to creditors or risk defaulting, a situation which may have consequences for the broader property market.
What do we know about Yang Huiyan?
Ms Yang typically keeps a low profile, despite overseeing one of China’s biggest companies.
Her father, Yang Guoqiang, was a farmer and construction worker before founding Country Garden in the 1990s.
It’s been reported he regularly took his teenage daughter to business meetings.
Ms Yang attended Ohio State University, returning to China shortly after completing her studies, but largely staying out of the public eye.
In 2006, she married the son of a senior provincial official after they met on a blind date, according to state run newspaper The China Daily.
In an article headlined Sorry bachelors richest Chinese woman married, published a year after her wedding, it was reported the photos from the ceremony publicly revealed the face of the famously private heiress.
Her father transferred 70 per cent of company shares to then 26-year-old Ms Yang before the company went public on the Hong Kong Stock exchange in 2007, with an initial public offering (IPO) of $US1.7 billion.
That rocketed her to almost the top of the rich list.
Father and daughter jointly managed operations from 2018, before the 42-year-old fully took over the company as chairperson earlier this year.
“She was worth $US34 billion a few years ago and very much stood out as being a rich woman in China, a country where it’s generally businessmen who get all the headlines,” said Fraser Howie, an independent analyst who specialises in the Chinese economy.
Her appointment may have broken ground for businesswomen in China, but it came at a precarious time in the country’s real estate market.
Country Garden reported a 90 per cent drop in core profit for 2022, and recently advised of a net loss ranging from approximately $US9,7 billion to $US11,7 billion for the six months ended 30 June 2023.
In one of her first acts in the new role, Ms Yang announced the company would focus on core geographical areas, reducing its presence in smaller cities.
But after missing interest repayments and with a bill looming, it’s unclear whether the action may have been too late.
China’s real estate crackdown
Country Garden is far from the first developer in China to come under strain.
In 2020, the country’s communist government began a massive crackdown on risky behaviour in its property market, which operated with enormous levels of debt.
With less easy money available, the sector — which accounts for more than a quarter of China’s GDP, according to some estimates — has struggled to pay its bills.
Last year, hundreds of mostly small developers filed for bankruptcy, according to a note by Andrew Collier from Orient Capital Research.
Additionally, after years of incredible demand for housing, the market is cooling and millions of apartments are sitting empty.
As the crisis worsened, property giant Evergrande began to show signs of distress, missing bond payments and triggering speculation its downfall could have flow on effects as the world grappled with the economic consequences of the pandemic.
After nearly two years in limbo, it filed for bankruptcy protection last week in the US, not long after Country Garden revealed it owes $US200 billion.
Unlike Evergrande, Country Garden’s woes largely came as a surprise.
“It had always been seen as less risky property developer,” said Victor Shih, director of the 21st Century China Center at the University of California, San Diego.
“The belief was that for Country Garden, because the distribution of [its] land bank tended to be in favourable places, their sales would not suffer, and they should be able to repay their debt.
“But I think one of the underlying dynamics that’s very interesting here is that unlike in previous downturns in the real estate market … we are seeing prices drop even in Shanghai, and Shanghai property prices have basically been on an upward trajectory without any interruption.”
If Country Garden misses the deadline for the end of its grace period, the company and its shareholders risk being sued by its creditors.
But even if they do find the money, its problems are far from over says Mr Howie.
“It will only be a matter of time because the underlying problem remains, [that being] the property market is broken,” he said.
One of Asia’s richest woman has her fortune cut in half
Less than two years ago, Ms Yang was worth an estimated $US30 billion, making her Asia’s richest woman by a long shot, according to Bloomberg’s Billionaires Index.
But her fortune has been cut by more than half in a matter of months, after Country Garden sought to raise cash by selling discounted shares last year, as China was gripped by a mortgage boycott.
At some sites construction has slowed or completely stopped, with workers telling Reuters they haven’t been paid since January – although a statement from the company disputed this.
It’s estimated Country Garden has nearly 1 million homes to finish, but it said in a statement to the Hong Kong Stock Exchange it would “spare no effort” to fulfil its orders.
“The Company will effectively ensure the operation of projects nationwide and complete the tasks of property delivery by implementing its main responsibilities, utilising funds according to their specific purposes and strictly controlling pre-sale monitoring funds etc., so as to fulfil its commitment to property owners,” the statement read.
Country Garden is now the equivalent of a Hong Kong penny stock, with the share price having plunged more than 70 per cent this year.
Its woes could be a sign that the heiress has lost some of her political clout, expert suggest.
“I think she once was very, very connected, could call up very senior officials and get different things done but I suspect that may not be the case so much anymore,” Professor Shih said.
“Because if Country Garden still had that kind of political clout, none of this would have been necessary in the first place.
“The one thing about an overseas bankruptcy or distress situation, is that everyone knows it would immediately be covered by global media, and the whole world would know it, and also that information will go back to the top leadership through different channels … so it really is a sure way to get the leadership’s attention.”
And while Ms Yang’s fortune is declining, it’s also under increasing scrutiny.
Earlier this month, the company announced Ms Yang had donated more than half her stake in the company — worth more than $US800 million — to a family charity.
The practice has become more common among China’s super wealthy as a result of a Chinese Communist Party policy called “Common Prosperity”.
While it is not clearly defined, the policy is generally understood to involve reducing the gap between China’s elite and its poorest citizens.
“There’s no tax distribution, there was actually no economic policies whatsoever to support Common Prosperity,” explained Mr Collier.
“However, the ability to use that to grab money from the large capitalist firms is the key to it.”
Some of China’s major companies — including Ali Baba and a lot of big tech firms — have set up charities in recent years, he said.
“One gets a sense that basically the regime, including the provincial governors, are so desperate for money that they’ll just go to whoever has it … [and] the government may simply say, ‘Well, you know, we want that money’ and they’ll just take it,” he said.
‘Building more houses doesn’t solve your problems’
After strict COVID controls were lifted at the end of last year, there were hopes that China’s economy would jump back to life and in turn provide a shot in the arm for the global economy.
But they have been well and truly dashed in recent months, with property far from the country’s only economic problem.
Some huge trusts operating as shadow banks have missed repayments and one in five young people are unemployed, a situation which has become so bad that the Chinese government has stopped publishing data on youth unemployment.
Officially the Chinese Government said it needed to review its methodology for the measure.
On the back of the latest Evergrande and Country Garden news, stocks in Hong Kong — made up largely of mainland Chinese companies — last week plunged more than 20 per cent below the most recent peak.
Typically Chinese homebuyers purchase a property before it’s completed, meaning some are now servicing mortgages for homes with an uncertain future.
With many cash-strapped Chinese developers now on shaky footing, there are fears this may have knock-on effects on ongoing builds of pre-sold housing projects, exacerbating an already diminishing confidence among the wider public.
While this is yet to play out, the Chinese cultural belief that money would be safe in houses is being put to the test, according to Mr Howie.
“Where we now find ourselves after 20 plus years of this [economic growth is] there simply is a huge oversupply of property, particularly in the lower tier cities, where building has well outstripped demand,” he said.
“[Now] you’ve got people who don’t necessarily have enough money to spend or are wanting to save their money, a job market that is much tighter, you simply don’t have the demand you had before,” he said.
“And so the previous model of selling properties to new buyers, and that will fund the future development is starting to fall apart.”
There have been various predictions of a stimulus announcement by the CCP, but so far any responses have been conservative.
“I think the capacity for China to have a big stimulus is much more limited than it was in the past,” says Mr Howie.
“You also have the problem that stimulus no longer works in the way it once did, if you’ve got too many roads, bridges and houses, building more of them doesn’t solve any of your problems.”