China’s Evergrande puts on a brave face. But will Beijing bail it out?

Evergrande’s chairman promised his employees Tuesday that they will “walk out of the darkness” caused by the embattled Chinese conglomerate’s historic debt crisis.

But what happens next for the company is stillanyone’s guess, and the lack of guidance from the company and authorities in Beijing about how the crisis will be resolved is creating uncertainty for investors worldwide amid fears that a collapse could slam China’s vast property sector and the global economy.

Xu Jiayin, the chairman of Evergrande Group, acknowledged in a letter to employees that the cash-strapped real estate developer “has encountered unprecedented difficulties.” The letter was published in the Paper, a state-owned Chinese media outlet, and confirmed to be genuine by an Evergrande representative.

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“I am convinced that through the joint efforts and hard work of leaders and employees at all levels, Evergrande will surely walk out of thedarkness as soon as possible,” he wrote.Xu added that he thinks the company will “surely be able to speed up the full resumption of work and production.”

Xu’s letter made no mention of debt repayments due this week.

The stock dropped as much as 7% in Hong Kong on Tuesday, though later pared most of its losses to end down 0.4%. That came after Monday’s 10% plunge. The stock has shed 84% this year and is currently trading at its lowest level since 2011.

Interest payments totaling more than $100 million are due Thursday on two of the company’s bonds, according to data provider Refinitiv. But it’s not clear how much — if any — of its debt obligations Evergrande will be able to meet. The group is China’s most indebted developer, with more than $300 billion worth of liabilities. Over the last few weeks, it warned investors twice that it could default if it’s unable to raise money quickly.

Fears over Evergrande gripped global markets on Monday, causing stocks to sink in Hong Kong, New York and and other major markets. Mainland Chinese markets are closed for a holiday and resume trading Wednesday.

The lack ofofficial comment from Beijing over how the Evergrande crisis may be resolved appears to be a major source of uncertainty. Economists at Macquarie Group said Tuesday that they expect Chinese policymakers to be “patient.”

The governmentstill wants to deter “excessive risk-taking” fromproperty developers like Evergrande, wrote Macquarie’sLarry Hu and Xinyu Ji, in a research note. But Beijing will also want to “maintain stability” in the property sector, they added. Evergrande aloneholds about 6.5% of the total debt held by the country’s property sector, according to an estimate by UBS.

“As such, policymakers would choose to wait first, then step in later to ensure an orderly debt restructuring,” Hu and Ji wrote.

Tommy Wu, lead economist for Oxford Economics, said he expects Beijing to intervene in some capacity.

“At least they will engineer some sort of restructuring so that it will look like more like a soft landing for the Evergrande saga,” Wu said.

TOPSHOT - A woman rides a scooter past the construction site of an Evergrande housing complex in Zhumadian, central Chinas Henan province on September 14, 2021. (Photo by JADE GAO / AFP) (Photo by JADE GAO/AFP via Getty Images)

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Evergrande’s troubles have been brewing for a while.In recent years, debts ballooned as it borrowed to finance its variousbusinesses, from housing and electric vehicles to sports and theme parks. Then, in August 2020, Beijing started reining inthe property sector’s excessive borrowing in an attempt to prevent the housing market from overheating and to curb debt growth.

In recent weeks, Evergrande’s liquidity crisis has intensified, triggering a further plunge in the company’s stocks and bonds.

The crisis has even sparked social unrest. The Chinese media outlet Caixin reportedlast week that several hundred people who had invested in an Evergrande wealth management product surrounded the company’s Shenzhen headquarters, demanding their money back.

The need to “soften the blow” for small investors will likely be the focus of any restructuring of Evergrande, according toRobert Carnell, head of research for Asia-Pacific at ING Economics.

He cited Chinese President Xi Jinping’s recent emphasis on “common prosperity” and a need to redistribute wealth in the interest of “social fairness.”That pledge has influenced Beijing’ssweeping crackdown on tech, finance, education and other sectors, as it blames the private sector for causing financial risks and exacerbating corruption and inequality.

Chinese President Xi Jinping addresses the Informal Economic Leaders' Retreat of the Asia-Pacific Economic Cooperation APEC via video link in Beijing, capital of China, July 16, 2021.

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Carnellwrote in a research note Tuesday that he expected the government to force investors to sit through an “uncomfortable wait” before deciding Evergrande’s ultimate fate. He pointed to Huarong Asset Management, whose stock was suspended from trading for several months this year after suffering a liquidity crunch and failing to release its 2020 financial results. The company was eventually bailed out by state-backed investors.

“There was a palpable sense of warning in that wait — don’t expect to suffer no losses — before the eventual rescue was put in place,” Carnell said.

Macquarie’s Hu and Ji, meanwhile, don’t think a “wholesale bailout” of Evergrande is likely.

“The government would make sure that the pre-sold apartments get done and delivered to homebuyers,” they said, though they added that shareholders and lenders could “take a big loss.”

— Kristie Lu Stout and Jadyn Sham contributed to this report.