Taipei, Taiwan — 

An increasing amount of people looking to buy homes in China have faced disappointment as their plans to move into new properties have been hindered by numerous bankrupt developers who have abandoned millions of pre-sold unfinished properties.

Many of the buyers could do nothing but vent their anger and frustration on Chinese social media platforms such as Douyin, known internationally as TikTok, over what they called “rotting apartments” that represented their lifetime savings. Police are cracking down on protests.

Experts warn that the loss of trust in an industry that was previously seen as a dependable means of accumulating wealth could potentially harm China’s progress and stability in 2024.

According to Darson Chiu, a research fellow at the Taiwan Institute of Economic Research, the real estate market has played a significant role in China’s economy. However, it is projected that this momentum will diminish, leading to an average economic growth rate of less than 5% starting in 2024. This statement was provided in a written response to VOA Mandarin on December 14.

One of the many victims, a user on Douyin from Henan province in central China with the username “The happy life in my rotting apartment,” shared a brief video on December 1 featuring a nearby construction project that had been stopped.

The speaker expressed that despite a year passing, their apartment is still not completed. They are hopeful that the construction of the building will resume soon so they can finally move into their future home.

In late 2022, a woman named Ms. Chen shared her story on a local TV news report in Changsha, located in the Hunan province. She stated that her family was struggling financially, as they could barely cover their monthly mortgage payment of $700 (5,000 yuan).

Chen stated that if their incomplete property continues to deteriorate, they will not have the strength to continue living.

VOA Mandarin has reached out to twelve individuals who own incomplete houses through Chinese social media platforms Douyin, Xiaohongshu (known as RED internationally), and Weibo, which is a Chinese microblogging site similar to X. However, none of them were willing to have a conversation.

Two attorneys in Shanghai and Beijing who have expertise in handling property disputes also declined to participate in an interview.

The attorney from Beijing reported that the Bureau of Justice in the city has prohibited lawyers from speaking with international media, citing concerns over the sensitivity of the class action. None of the clients under his representation were willing to communicate with foreign press.

The China Dissent Monitor, an initiative by the American organization Freedom House, has been monitoring posts on Chinese social media and recorded 1,841 protests related to the real estate industry from June 2022 to September 2023. However, the complete data for 2023 will not be released until January, according to Kevin Slaten, the lead researcher in Taipei for the China Dissent Monitor project.

Slaten reported that the majority of strikes were initiated by homebuyers, citing problems with project delays, contract breaches, and suspected deceit. The remaining strikes were initiated by construction workers seeking payment for their work.

Slaten stated that the recorded instances of police repression during housing protests only account for a small portion, as the available evidence is limited to video clips.

However, the increasing suppression of demonstrators highlights the seriousness of the danger posed to China’s ruler, Xi Jinping.

According to Slaten, who spoke with VOA Mandarin over the phone, Xi, as the leader of a centralized system and someone who has attempted to centralize power, would view this [decentralization] as a danger to his goals of maintaining strong economic growth and utilizing it as a means to gain support and loyalty for the authoritarian regime.

According to research provided to VOA Mandarin by Ting Lu, the chief economist for Nomura in China, an estimated $448 billion is required to finish the homes that were pre-sold between 2015 and 2020. This amount would cover approximately 20 million homes, assuming an average construction progress of 50%.

In a research paper published on November 27, Lu proposed that Beijing act as a “lender of last resort” to rescue the property industry. Failure to do so could potentially threaten social stability in the coming year.

However, Nan Li, a finance scholar in Shanghai, had a different opinion. He stated that the funds received from selling off the assets of builders who have declared bankruptcy should be given top priority in order to complete the construction of unfinished homes.

Li stated that a government bailout would only encourage developers to continue over-leveraging.

According to Li, the largest companies facing severe debt problems have made an error by taking on too much leverage. He stated to VOA Mandarin that there is no justification for the government to rescue them.

Li emphasized the importance of the Chinese real estate industry learning from the success of Guangdong province. In 1997, the issue of numerous unfinished homes was resolved after restructuring nonperforming assets of builders in accordance with the law and market principles.

Source: voanews.com