Explained: How Chinese billionaire Hui Ka Yan lost 93% wealth

According to The Sydney Morning Herald (SMH), Hui Ka Yan, Chairman of Evergrande Group, the head of a troubled Chinese real estate developer, has seen his wealth fall from USD 42 billion to USD 3 billion as the nation’s once-booming real estate market continues to slow.

According to the Bloomberg Billionaires Index, Hui, formerly one of China’s wealthiest and most powerful giants, lost 93% of his fortune while combining high-level politics and business.

The China Evergrande Group chairman, who was formerly the second-richest person in Asia, has seen a significant decline in wealth. Hui is also becoming more and more politically isolated, with the latest indication coming from the Chinese People’s Political Consultative Conference.

Government representatives and the greatest personalities in the industry make up the CPPCC, an exclusive group. Hui had been a member of the political advisory body’s elite 300-member standing committee since 2013, as well as the political advisory body since 2008.

However, he was asked not to attend the annual convention last year because his property empire had become the biggest victim of the country’s credit crunch, according to SMH. He is no longer even listed on the most recent list of people who would make up the CPPCC for the upcoming five years, which was made public on Wednesday.

In March, the new CPPCC members will go to Beijing for the group’s 14th National Committee, where they will address a range of topics, including political and social issues, new legislation, and the development of the country.

According to Willy Lam, an adjunct professor at the Chinese University of Hong Kong and the author of many books about Chinese politics, “The CPPCC job is like an honorary prize that China grants to committed business people to make sacrifices to the country.”

Not only Hui but also Hui Wing Mau of Shimao Group Holdings Ltd., Zhang Li, the co-founder of Guangzhou R&F Properties Co., and Hoi Kin Hong of Powerlong Real Estate Holdings are among the real estate moguls who have left the CPPCC, according to SMH.

The action shows China’s evolving stance toward developers, many of whom have lost favour as a result of a protracted real estate crisis that jeopardises the health of the entire economy.

Crackdowns in a number of businesses are the result of President Xi Jinping’s “common prosperity” initiative to redistribute wealth. The implementation of a rigorous “three red lines” policy to control debt in the real estate sector has exacerbated a crisis that is hurting banks, trust companies, and millions of homeowners.

A two-year severe regulatory crackdown and the ongoing strict “zero-COVID” policy also caused Chinese tycoons’ fortunes to plummet last year by the greatest substantial margin in more nearly two decades.

Property tycoons like Hui, who caused difficulties in the industry with their excessive borrowing, are not on the list, which is not at all surprising, according to Lam. Evergrande has more than USD 16 billion in outstanding dollar notes and first missed payments on its dollar bonds in 2021.

It submitted a reorganisation plan this week with two possibilities after missing multiple deadlines it set for delivering a preliminary restructuring blueprint, according to persons familiar with the situation. After failing to submit 2021 results, the company’s shares have been suspended for almost a year, and PwC resigned as its auditor on Monday.

Since last March, the stock of Shimao, another defaulter, has been suspended. After posting a record USD 16 million bail, R&F’s Zhang was taken into custody in London last month on US bribery accusations and is now restricted to his five-bedroom luxury apartment.

Another victim of the crisis, Powerlong, has lost more than 80% of its value since its peak in 2021, according to SMH. In the last two years, the five biggest real estate moguls in China together lost roughly USD 65 billion, according to Bloomberg’s wealth index.