The Unraveling of China’s Property Boom Leaves Small Suppliers Struggling to Get Paid
Lan Mingqiang, once a beneficiary of China’s property boom, is now faced with financial troubles due to the unraveling of the market. The real estate company, Country Garden, owes Lan’s company $21,000, leaving him unable to pay his son’s school fees. As a result, Lan has had to leave his family in Chongqing and try to make a living selling snacks to tourists in Zhengzhou.
Impact on Small Businesses and Workers
Small businesses and workers who depended on the property boom are no longer receiving payments. These suppliers, including painters, cement makers, builders, real estate agents, and sales office furnishers, are collectively waiting on at least $390 billion in payments, according to Gavekal Research. Lawsuits and complaints to local authorities are increasing, and construction workers are protesting at empty construction sites.
The Strain on China’s Economy
The current situation is adding strain to China’s already struggling economy. Years of lockdowns and COVID-19 prevention measures have resulted in decreased consumer spending, reduced hiring by companies, and a decline in home purchases. Country Garden, once one of China’s biggest real estate firms, is on the brink of defaulting on its payments.
No Relief in Sight
The sudden reversal of fortune for Country Garden is raising concerns about the future of China’s developers. Many of these companies have been under stress for years due to government regulations limiting their access to bank financing. Bartering is no longer a viable option, and suppliers are left with little hope of ever receiving payment.