Country Garden’s Unfinished Projects Reflect China’s Real Estate Woes

Construction slowdowns and halted projects at Country Garden’s residential complexes in Tianjin, a major Chinese metropolis, underscore the mounting challenges faced by China’s real estate sector. Country Garden, once viewed as financially robust, has been hit hard by a debt crisis that echoes the broader concerns in the second-largest economy in the world.

The partially completed Yunhe Shangyuan complex, located on the outskirts of Tianjin, stands as a testament to the company’s struggles. Workers at the site, including laborer Wang, voiced their concerns over unpaid wages, with some stating they hadn’t received payment since Chinese New Year in January. “They haven’t paid us since Chinese New Year. We are all worried,” said Wang, who added that he had stopped working at the site in recent days.

Tianjin, a bustling port city, houses two Country Garden projects, both now marked by reduced construction activity. Dorm residents at the sites spoke of months without pay, expressing their anxieties about supporting their families. Workers at the Yunhe Shangyuan site, like Wei, detailed their financial pressures, indicating that a one-off living stipend of 4,500 yuan ($618) was insufficient to sustain them and their families.

Once emblematic of successful property developers, Country Garden’s financial struggles reflect the downturn in the real estate market. The company’s challenges contribute to China’s broader debt crisis within the real estate sector, a significant driver of the country’s economy. This crisis has been exacerbated by a housing slump and weak consumer spending.

Country Garden’s Yunhe Shangyuan project issued a statement on WeChat asserting that its “registered employees” were indeed being compensated. Meanwhile, the government had ordered a suspension of construction at the Yunjing Huating site to address management issues, according to a project representative. The suspension is expected to be temporary, with work slated to resume shortly.

Country Garden’s issues are not confined to its own employees but extend to subcontracted workers. Shenyang Tengyue Construction, a contractor for one of the projects, failed to respond to inquiries regarding workers’ wages.

Analysts estimate that Country Garden has nearly 1 million homes awaiting completion, a staggering challenge given the company’s current financial state. The real estate giant’s difficulties are emblematic of wider industry woes. China’s real estate market experienced a slight recovery in the early part of 2023, but transaction volumes have since declined, leaving numerous housing markets in a “depressed” state.

Gao Fei, from the Tianjin branch of Centaline Property Agency, noted that while halted projects are relatively rare, slowing construction progress is more common as developers adjust to sales rates. A slowdown in sales often translates to a deceleration in construction across the industry.

China’s real estate sector remains under scrutiny as economic implications loom large. The struggles faced by Country Garden stand as a bellwether for the challenges gripping the broader Chinese real estate landscape.