Property development firms in China borrowed in US dollars and thus the slide in the yuan against the dollar has increased these firms debt repayments.

Nikkei Asia calculate mainland Chinese property developers registered close to us$3 billion in foreign exchange losses during H1 of 2023. Adding that the usual suspects top the list, Evergrande, Sunac and Country Garden.

Niikei add:

  • The foreign exchange losses are on paper only and the actual loss or gain depends on the exchange rates of the respective due dates. But the figures act as a gauge of exchange rate risks involved with the foreign currency-denominated debts of distressed property developers
  • Alicia Garcia Herrero, chief Asia Pacific economist at Natixis, views the yuan depreciation as a result of increased liquidity due to cuts in reserve requirement ratios and interest rates by the People's Bank of China, which is under stress from the real estate sector. "Both, together with the now negative portfolio flows into China, have weakened the yuan," she said. The weak yuan is seen as a byproduct of assisting distressed developers, but it is apparently adding to the financial burden for those highly exposed to dollar debts.

The report may be gated, but here is the link for more.


Borrowing in offshore currencies and then getting into strife when the local currency falls is a tale as old as time. Or as old as floating FX rates anyway.

Weekly candles USD/offshore yuan:

usdcnh china property developers 18 September 2023