The consensus that Evergrande’s default will not create a Lehman-style systemic disaster is now well established.
Evergrande’s debts of just over $300 billion are less than half the $619 billion that Lehman owed when it filed for bankruptcy in September 2008, and the Chinese property firm is not an important trading counterpart for systemically important financial institutions.
That should give Chinese authorities time to undertake the laborious task of winding down Evergrande.
A steady drip of liquidity from the People’s Bank of China in the approach to a national holiday at the beginning of October indicated that the central bank was determined to hold down interbank rates and calm fears of contagion to the banking system.
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