China’s Evergrande debt woes could spill over to the US, the Fed says

China’s Evergrande debt woes could spill over to the US, the Fed says

The US Federal Reserve has warned that stresses in the Chinese real-estate sector from Evergrande's debt crisis could spill over to the US. In its released on Monday, the Fed warned of high leverage at financial institutions and stretched real-estate valuations in China. "In this environment, the ongoing regulatory focus on leveraged institutions has the potential to stress some highly indebted corporations, especially in the real estate sector, as exemplified by the recent concerns around China Evergrande Group," said the Fed in its report. Such stresses could spread to the Chinese financial system, through spillover to financial firms, a sudden correction in real estate prices, or a reduced investor risk appetite, said the Fed. "Given the size of China's economy and financial system as well as its extensive trade linkages with the rest of the world, financial stresses in China could strain global financial markets through a deterioration of risk sentiment, pose risks to global economic growth, and affect the United States," the central bank added. Real-estate giant China Evergrande is now the world's most indebted company with a $300 billion debt pile. It has managed to several overdue coupons just in time, averting a default that could send the