Taipei, Taiwan — A growing number of home buyers in China have seen their dream of moving into new homes dashed in the past year after a slew of bankrupt developers left behind millions of unfinished pre-sold 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. The crisis of confidence in a sector that was once a reliable route to building wealth may threaten China’s growth and stability in 2024, experts say. “Since the real-estate market has historically been a key driver of China’s economy, losing this momentum is expected to result in a long-term average economic growth rate below 5% starting in 2024,” Darson Chiu, a research fellow at the Taiwan Institute of Economic Research in Taipei, told VOA Mandarin in a written reply on December 14. Among countless victims, a Douyin user from the Henan province in north-central China with the name, “The happy life in my rotting apartment,” posted a short video clip on December 1 showing a local project where construction was halted. “It’s been a year, but my apartment remains unfinished. … I hope the construction of the building can be restarted soon so that I can move into my future home,” he said in the video. A victim in the Hunan province city of Changsha, identified only as Ms. Chen in a local TV news report, said in late 2022 that her family could barely make ends meet after paying the monthly mortgage of $700 (5,000 yuan). “If my unfinished property keeps rotting, I personally won’t have the courage to go on living,” said Chen. VOA Mandarin has approached a dozen owners of unfinished homes on Chinese social media platforms Douyin, Xiaohongshu, known as RED outside of China, and Weibo, China’s microblogging site similar to X. None agreed to talk. Two lawyers in Shanghai and Beijing who specialize in property disputes also refused to be interviewed. The Beijing lawyer said the city’s Bureau of Justice has banned lawyers from talking to foreign press, citing “the class action’s sensitivity.” None of his clients wanted to talk to foreign press. The China Dissent Monitor, a project of U.S. rights group Freedom House, has been tracking postings across Chinese social media and tallied 1,841 demonstrations linked to the property sector between June 2022 and September 2023. Final 2023 figures won’t be available until January, said Kevin Slaten, Taipei-based research lead with the China Dissident Monitor project. Two-thirds of the strikes were staged by homebuyers over issues like project delays, contract violations and alleged fraud, while the others have been triggered by construction workers demanding unpaid wages, according to Slaten. One-fourth of the housing protests saw police repression, which Slaten said is an underestimate, as piecemeal evidence can only be captured from those video clips. But the trend toward silencing protesters shows the gravity of threat to China’s leader, Xi Jinping. “As the dictator of such a centralized system and a person who’s tried to centralize power, he [Xi] definitely sees this as a threat to his vision, which is keeping economic development high, making sure that he can deliver this to people as a way to co-opt them and garner enough support among the public for the authoritarian system,” Slaten told VOA Mandarin by phone. Ting Lu, chief China economist at Nomura, estimated in mid-November that $448 billion is needed to complete the homes pre-sold between 2015 and 2020 that remain unfinished projects, assuming an average construction progress of 50%, according to his research provided to VOA Mandarin. That represents roughly 20 million homes. In one of his research papers dated November 27, Lu urged Beijing to “play the role of lender of last resort to save the property sector” or the crisis could endanger social stability at some point next year. But Nan Li, a Shanghai-based finance scholar, disagreed, saying that the proceeds from the liquidation of builders’ assets after they file for bankruptcy should be prioritized to ensure the delivery of unfinished homes. Li added that any government bailout will only indulge the developers’ appetite for over-leveraging. The biggest firms with the worst debt woes “have made a mistake in exercising excessive leverage. There’s no reason for the government to bail them out,” Li told VOA Mandarin. Li noted that China’s property sector should learn from the experience of Guangdong province, where its problem of massive unfinished homes around 1997 was eventually solved in years after builders’ nonperforming assets were all restructured in a lawful manner and in line with the market mechanism.
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