FirstFT: Country Garden reveals $7bn loss as China’s property sector turmoil grows

Receive free Global Economy updates

Good morning. We start today with more bleak news from Country Garden, the troubled private property developer that is China’s largest by sales.

The company revealed a record Rmb48.9bn ($6.7bn) loss for the first half of the year as it battles to survive the liquidity crisis afflicting China’s real estate sector.

The six-month results released on Wednesday represent the highest ever losses for the group, until recently considered safer than many of its peers. They also highlight the dire outlook for an industry typically responsible for more than a quarter of economic activity in China.

The company’s woes are part of a two-year real estate liquidity crisis that began with the default of developer China Evergrande in 2021 and has shown signs of spilling over into the Chinese investment industry. Our report has more on China’s ailing property sector.

For more news, analysis and commentary on China, visit the FT’s China Focus hub. Here’s what else I’m keeping tabs on today:

Economic data: India publishes GDP figures for the period from April to June. Economic growth is expected to reach 7.7 per cent, the fastest annual pace in a year. (Reuters)
Japan: Workers at one of Tokyo’s most famous department stores are going on strike for the first time since the 1950s.
Malaysia: Financial markets are closed for National Day, celebrating the country’s independence from the UK in 1957.

Five more top stories

1. The White House has warned of “actively advancing” arms talks between Russia and North Korea after Vladimir Putin’s defence chief travelled to Pyongyang on a mission to secure ammunition for the invasion of Ukraine. According to a US intelligence assessment made public on Wednesday, talks between Moscow and Pyongyang aimed at deepening military co-operation have progressed to a new phase.

2. US commerce secretary Gina Raimondo hailed a “new approach” to handling tense business ties with China, pledging to make a new mechanism for resolving commercial differences work better than past initiatives that failed to avert conflict over technology and trade. Raimondo hailed the “commercial issues working group” as an achievement of her trip to Beijing. But some experts are sceptical.

3. Ukraine launched its biggest drone attack inside Russian territory since Moscow invaded last year, demonstrating its expanding ability to strike targets deeper behind enemy lines. Kyiv’s drones struck seven Russian regions and destroyed several military cargo planes. Here are more details on the attack.

4. A Pakistani judge has blocked Imran Khan’s release from prison a day after another court overturned a three-year sentence against him, as the popular former prime minister fights a barrage of legal cases that threaten to hamper his political comeback. The legal manoeuvring highlights the fading chances that Khan can make a comeback in time for the next elections, which are expected in early 2024.

5. Military officers in Gabon said they had seized power and placed its president Ali Bongo under house arrest, as the oil-rich country became the latest in west and central Africa to fall victim to a coup. The putsch was announced hours after Bongo had been declared the winner of Saturday’s election. Brice Oligui Nguema, head of the presidential guard, was confirmed later on Wednesday as Gabon’s new military ruler. Read the full story.

News in-depth

Every day, reams of personal data flow through the subsea cable landing stations that have proliferated around India’s coast. In each of these, innocuous-looking hardware is installed to search, copy and pump that data to Indian security agencies on demand, helping make up a “backdoor” that allows prime minister Narendra Modi’s government to snoop on its 1.4bn citizens — and attracting “potentially irresponsible” companies vying to sell powerful surveillance tools.

We’re also reading . . .

Chart of the day

Column chart of Medical cost per capita (Rmb) showing China’s medical costs have surged in the past decade

Over the past few weeks, at least 176 hospital bosses have been detained in China as President Xi Jinping’s administration has sought to stamp out corruption across the healthcare sector. The crackdown comes amid alarm over rising medical fees in China, with per capita medical costs having more than doubled in the seven years to 2021, according to Wind data.

Take a break from the news

Why does the universe exist? New research on neutrinos, the subatomic particles that permeate the universe, may furnish answers over the coming decade — answers that could prove as unsettling as Einstein’s challenge to Newton’s law of gravity.