Half-built stadiums & crumbling skyscrapers… how China’s property crash is HUMILIATING Beijing on the world stage
FROM half-built stadiums and crumbling skyscrapers to eerie abandoned theme parks, China is littered with decaying buildings and half-finished projects.
Thousands of constructions schemes have screeched to a halt as its feared the country's property boom is about to collapse - with debts of an estimated £86billion ($117billion).
There is financial chaos spreading across China after Xi Jinping's crackdown on the massively indebted real estate business - and the increasingly desolate scenes are proving the be embarrassing for Beijing.
For years, property firms in China have been given free reign to borrow obscene amounts of cash from the banks in the race to build bigger and better.
Dozens of skyscrapers continually pop up overnight in all corners of the country - but the construction rush has often been fuelled by risky finances.
Chilling pictures show the abandoned and sometimes half finished structures which have been left to rot as companies go belly up.
Huge apartment blocks have been left eerily quiet as construction stops, stadiums have been dramatically taken over by the government, and unfinished skyscrapers have even been bulldozed.
Building work at Guangzhou Evergrande football stadium was halted due to a lack of cash - with pictures showing cranes sitting abandoned and dormant over the half built structure.
And a elsewhere a complex of hotels, theme parks and tourist attractions in north China's Hebei province remains unfinished after the real estate company went bankrupt after.
Roger Garside, Associate Fellow at the Henry Jackson Society, told The Sun Online that China is facing "debt mountain".And the Chinese president recently came down hard on the property sector as debt levels among the biggest conglomerates started to creep up to unsustainable heights.
The government brought in tough new rules to get developers to slash borrowing and to curb the rampant oversupply of housing.
But the value of home sales has plummeted by 20 per cent year on year and real estate firms are now grappling with exploding mountains of debt.
And Evergrande, China's most indebted developer, is at the centre of the disaster with a massive $300billion in liabilities.
Once China's top-selling property developer, the embattled company now has dozens of stalled residential projects and an estimated 1.5million unfinished houses that it needs to deliver to investors.
The government was forced to dramatically step in and take over the debt-riddled firm's stadium in Guangzhou in December last year after construction was halted due to a lack of cash.
The 100,000-capacity ground was planned to be the home ground for Guangzhou Evergrande - a team in China’s Super League.
The potential collapse of Evergrande has sent shockwaves through the financial and property sectors.
And sparked concern its downfall could have a cataclysmic effect on China's entire financial system and even international markets.
According to Refinitiv data, real estate developers in China have a huge $117billion worth of debt maturing in 2022.
Creditors across the globe are now scrambling as Chinese authorities race to stop the collapse of its real estate industry.
Beijing has even resorted to prodding state-backed property developers and government-owned companies to buy some of Evergrande's assets.
Mr Garside told The Sun Online: "The Communist regime has known full well for over a decade the risks that have been building in its economy.
"It has been relying excessively on debt to fuel growth since 2008, a reliance which is most strikingly illustrated by the property sector, until it now has a debt mountain of a height such that no nation has ever succeeded in reducing it significantly without either inflation or recession.
"Its return on investment has been steadily declining. More and more of its economic activity has been unprofitable."
Mr Garside said the Chinese state has been forced to step in to halt a "sudden" collapse of the property sector - and Evergrande.
He said: "The impact of a sudden, total collapse of Evergrande would have had an impact on the domestic economy greater and more immediate than on the international economy.
"A sudden, total collapse of Evergrande would have been dangerous, even politically.
"So, for domestic more than international reasons, the government had to move to prevent such a collapse."
But Mr Garside said sales of China’s top 100 property developers plummeted 39.6 per cent year on year by value in January.
He warned: "If sales do not recover, the consequences for developers, supplier companies, savers, jobs, financial institutions, and local government revenues (through lower prices at land prices) evoked above will be severe.
"And the financial capacity of local governments to deal with the problems varies greatly; some are already deeply in debt."
Michael Pettis, professor of finance at Peking University, said everyone in China, including developers, had "made the same bet" on exponentially rising property prices.
He told The Guardian: "The problem of course is if property prices ever stop rising, because everyone has made the same bet everyone’s balance sheet starts unravelling at the same time, and it immediately becomes a systemic problem.
"That is what has happened in China."
Evergrande officially defaulted in December, but its future remains in the balance.
And Dr Marco Metzler from Deutsche Marktscreening Agentur warned the collapse of the company could spark the crash of the world financial market.
He told the Express: "This is the first domino of the collapse of the market. It will be even worse than the 2008 financial crash. The market is bigger than what the US was."
GHOST TOWNS
He added: "Plus, the supply chains aren’t working and there is inflation. If the market doesn’t crash, we will have hyperinflation and that will have the same effect on the economy. It’s even worse than 2008."
The shocking oversupply of housing in China means analysts have estimated an eyewatering 90million people could be housed in the empty properties.
The construction frenzy has also left half-built amusements parks and tourist attractions abandoned for years - and a full-scale replica of the Titanic costing £110million has been sat rusting for six years.
An amusement park called Wonderland near Beijing has been deserted for more than 20 years after a feud between the local government and farmers over property prices halted construction.
It was promised to be the "largest amusement park in Asia" - but it's now it's a post-apocalyptic maze of overgrown pathways and abandoned castle-like buildings.
China's so-called "ghost towns" are not a new phenomenon, but the authorities are now taking drastic steps to deal with the plague of derelict buildings.
Just last year, 15 skyscrapers in the city of Kunming were dramatically demolished after standing unfinished for seven years, with the empty high-rises vanishing into a pile of dust in just 45 seconds.
The construction of the complex – named Sunshine City II – began in 2011, but the developer quickly ran out of money and construction came to a complete halt in 2013, Vice News reports.
Another company bought the project - and its $3.6million debt - in 2020 and asked for the buildings to be bulldozed due to the shoddy state of the building work.
According to reports, it was the single largest demolition in China to date.
'TOO BIG TO FAIL'
The prospect of civil unrest over unfinished apartments and unpaid wages as construction firms stall is also looming over the country.
But Beijing has worked to curb any ricochet effect on the financial system from Evergrande’s troubles.
The central bank vowed to protect consumers exposed to the housing market and inject more cash into the banking system.
But Craig Singleton, an adjunct fellow in the China Program at the Foundation for Defense of Democracies, told CNN the Evergrande debacle has sparked serious questions over the economy.
He said: "China's leadership is attempting to play it cool, but the circumstances surrounding Evergrande's downward spiral raises serious questions about Xi Jinping's stewardship over China's rapidly cooling economy.
"These latest interventions, by both the central government and officials in Guangdong, suggest Chinese officials now begrudgingly accept that Evergrande is, in fact, 'too big to fail'."
And Mr Garside has said the only solution to China's spiralling debt problems would be a change of political regime - which is unlikely.
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