According to the Wall Street Journal, Chinese authorities have instructed local officials that Evergrande, a heavily indebted property developer, could be dissolved.
Local officials described Chinese authorities' signals as "getting ready to the possible storm" and claimed that the government instructed them to only intervene at the very last moment to stop Evergrande from crashing into other countries.
The report suggests that even though the implications are global, the central government may not have the resources to bail out Evergrande. In recent weeks, Evergrande's inability to pay interest payments has been a cause of market sell-offs all over the globe.
The company paid a local bond payment on Wednesday. This helped to boost Asian markets. It is not clear if the company will pay interest on Thursday for its offshore bonds.
Bloomberg reported Thursday that Beijing authorities told the company to not default on dollar-denominated interest payments.
Evergrande, a conglomerate of companies, grew rapidly during a debt-fueled construction boom in China. Beijing has expressed concern about Evergrande's high corporate debt. China also placed restrictions on lending. This was in addition to a drop in housing demand.
The Wall Street Journal has more information about this story.
