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Jim Cramer on Evergrande: Maybe Xi Didn't Realize This Is a House of Cards

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China's second-largest property developer Evergrande surged upwards of 17% in Hong Kong trading Thursday.

On Wednesday, the company reached an agreement with onshore bondholders to pay interest on a yuan bond due September 23, according to a stock exchange filing.

However, the company has yet to provide guidance on its plan to meet its debt to offshore investors. By the close of Hong Kong trading, the company did not update the status of a $83 million interest payment on its 5-year, U.S.-dollar denominated bond also due today. A payment on Evergrande's 7-year U.S. dollar bond is due September 29.

Meanwhile, Chinese authorities are asking local governments to prepare for the potential downfall of Evergrande, according to reporting from the Wall Street Journal.

While risks abound for Evergrande, in a recent column on Real Money, Jim Cramer noted that Evergrande was never the systematic risk some feared as Evergrande's debt is owed to offshore investors. "The foreign bond buyers are from countries that are so on the hook to China that it doesn't matter if Xi crushes them, so, despite what the press will say the risk stayed market and never went systemic," Cramer wrote. 

Continuing his discussion on China's recent approach to big business with Action Alerts PLUS senior analyst Jeff Marks, Cramer called China's treatment of Evergrande and other companies a "tactical mistake" and may have mistakenly irrevocably harmed the average Chinese investor. 

"[President Xi] cut his nose off to spite his face," Cramer said. "Maybe he didn’t realize this thing is a total house of cards."

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