I warned Evergrande, says ex-economist

The former chief economist of China Evergrande (3333) says the embattled developer ignored his repeated warnings to reduce debt and halt its plans to diversify into new businesses.

Ren Zeping, one of the highest-paid economists in China, who left Evergrande earlier this year, said he was often criticized internally for his suggestions. He revealed this in a post on his Wechat social media account.

Ren's post followed other social media comments suggesting he was part of the decision-making that led to Evergrande's deepening crisis.

"When I joined, I advised debt reduction and opposed diversification, face-to-face to several highest-ranking executives," Ren said yesterday.

"But my suggestion got me severely criticized in an executive meeting later, and the criticism lasted a long time. I was told I was lacking ambition and not recognizing a major company strategy."

Ren drew public attention when he joined Evergrande in late 2017 with an annual salary of about 15 million yuan (HK$18.10 million), media reports said.

After he came on board, Evergrande's liabilities-to-assets ratio, a measure of leverage, rose sharply to 86.3 percent, he said in the post. Several months later, the economist cautioned in an internal report that defusing risks is the first and foremost priority of the Chinese government over the next three years, and that no company should bet on a policy shift.

Ren joined Evergrande during its heyday, when the developer topped the property sector by sales and was one of the best performing stocks on the MSCI China index.

Ren's post came as offshore bondholders of Evergrande were bracing for news on more than US$148 million (HK$1.15 billion) in looming bond coupon payments after the company missed two coupon deadlines last month.

Expectations that the company will make the semi-annual payments on its April 2022, April 2023 and April 2024 notes due on October 11 are slim as it prioritizes onshore creditors and remains silent on its dollar debt obligations.