Evergrande’s million-dollar former economist says his counsel fell on deaf ears as he disowns developer’s debt-fuelled growth

Ren Zheping was paid 15 million yuan per annum when he headed the Evergrande Research Institute from December 2017 to March 2021

The economist, now working at Soochow Securities, made his name for accurately calling the peak and crash of China’s stock market in 2015

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An undated photo of Ren Zeping, the former director of the Evergrande Research Institute from December 2017 through March 2021. Photo: WEIBIO

Published: 6:00pm, 11 Oct 2021Updated: 6:29pm, 11 Oct 2021

Ren Zeping, China Evergrande Group’s ex-chief economist and the country’s highest paid strategist, has disowned the leveraged diversification and debt-fuelled acquisitions of his former employer, as the world’s most indebted developer faces another string of bond payments this week.

The former head of the Evergrande Research Institute – with an annual salary of 15 million yuan (US$2.3 million) – said he had admonished the parent company’s top executives to focus on cutting debt instead of diversifying away from its core property business, according to a post on the WeChat account of Ren, who joined Soochow Securities as chief economist in March.

“I was criticised publicly, for a rather long time, at a top management meeting,” Ren wrote. “I was told that I am not looking at the situation from a broader view and not getting a thorough understanding of the company’s major strategy. Many of the employees know about this. It was such a huge frustration and heavy blow for me, [as someone] who was new to the company and [who had] planned to help the company better develop.”

Evergrande’s spokespeople did not respond to Ren’s WeChat post. Still, the account of events by the developer’s brains trust from late 2017 until March 2021 offers a glimpse into Evergrande’s journey from a developer of mass-market homes into a conglomerate teetering on the brink of collapse with US$300 billion in liabilities and businesses from electric cars to a professional football team.

To be sure, Evergrande’s debt-fuelled growth preceded Ren’s appointment. Founded by the magnate Hui Ka-yan in 1996, Evergrande expanded into the food and drinks business in December 2013 to produce spring water, infant formula milk, grain and cooking oil, only to sell what it called the “fast products” business in 2016. Evergrande lost some 4 billion yuan by May 2015, according to an auditing report by PwC in 2015 when the unit sought for listing on The National Equities Exchange And Quotations, also known as The New Third Board

The developer paid HK$12.5 billion (US$1.56 billion) – a substantial premium to prevailing market prices – in November 2015 for a 26-storey office tower in Hong Kong offered by Chinese Estates Holdings, in a transaction that JPMorgan’s analysts described as “another example of immature capital management” by Evergrande, in a note to investors.