China's real estate crisis, now in its fourth year, continues to cause unrest among investors and homebuyers who have not received payment or whose homes remain unfinished. The situation is only worsening, and experts are concerned about the potential impact on the country's economy. The property sector has traditionally contributed about a quarter of China's annual economic growth and accounts for approximately 70% of household wealth, making it the preferred choice for savings.
The repercussions of this crisis are far-reaching. Both domestic and overseas investors are facing losses, and distressed firms are resorting to layoffs. However, one widely underestimated issue is the growing discontentment stemming from unfinished residential properties developed by debt-ridden real estate companies. According to Nomura analysts, by the end of 2022, there were approximately 20 million such units left incomplete.
As documented by Freedom House's China Dissent Monitor project, there were a staggering 1,777 protests related to the property sector between June 2022 and October 2023, with a majority specifically targeting unfinished housing projects.
Our team spoke with several individuals directly affected by this crisis and extensively reviewed online commentary, uncovering an overwhelming sense of anger and frustration.
Li Yun, a housewife in Beijing, expressed her relief at having acquired her apartment just before investors attempted to rescue Evergrande. However, she empathized with later customers who faced difficulties due to a lack of government intervention and Evergrande's subsequent collapse.
It is worth noting that Evergrande, China's most indebted real estate developer, was recently ordered into liquidation by a Hong Kong court. Additionally, Country Garden Holdings, the nation's largest private property developer, experienced its first dollar bond default in October and has since rapidly sold off assets. Multiple requests for comment from both Country Garden and Evergrande went unanswered.
Workers Left in the Lurch
Contractor Highlights Unfulfilled Promises and High Legal Costs
For years, workers have been grappling with the implications of uncompleted construction projects. He Shui, a contractor from Chengdu, voiced his frustration, stating, "In recent years, it's become increasingly difficult for me to receive the full payment for both personal and commercial property projects. Moreover, the exorbitant lawyer fees required to seek compensation make it economically unviable to pursue litigation."
Although Chinese websites are subject to heavy censorship, numerous online commentaries manage to evade "sanitizers" or are posted before being deleted. Momo, an individual who goes by this pseudonym on China's emerging social platform known as Little Red Book, shared her distressing experience after the completion date for her Country Garden unit came and went. Following her disappointment, she lodged a complaint with the local government housing bureau, only to be reassured by a Country Garden representative that her unit would be finished within three months.
Ultimately, Momo felt compelled to update her situation beneath her initial post, lamenting, "There is no observable progress in the construction. We are left with no alternative but to wait."
Comparable accounts to Momo's can also be found on other social media platforms such as Douban and Douyin, China's own rendition of TikTok.
Within Chinese social media spheres, the term "thunderstorm" has become a commonly employed metaphor to depict the dire straits faced by construction firms.
Madam Ren further adds, "Have any of you encountered the same predicament of being maliciously denied wages? Numerous villas in Country Garden remain unoccupied or unfinished. I wonder if anyone would be willing to purchase them. It's such a waste of land and resources."
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