China’s Crumbling Real Estate Sector

China’s obsession with real estate is big business.

The Chinese government sees real estate as a growth fillip. It keeps constructing and building houses to spur investments, in the process displaying an inaccurate impression of the nation’s wealth.

When the country’s growth figures emerged from the COVID pandemic, as the only economy that has marked a substantial positive growth, many analysts immediately pointed to the growth figures riding on the back of real estate.

Investments in property in China though often ‘overheat’.

In 2014, the IMF warned Beijing that an oversupply of property would lead to detrimental effects across the economic landscape.

The reliance of China’s economy on the property sector has always been open to debate. In a 2019 study, more than 61% of Chinese households were living in houses that were less than 10 years old.

And in 2018, over 22% of China’s housing was unoccupied – equating to over 50 million empty houses.

But what happens to all these buildings in China?

They fall.

Last year, at the peak of the COVID pandemic the Xinjian Hotel in Quanzhou, Fujian, built in 2018, was being used as a coronavirus quarantine facility until the hotel collapsed in March 2020, leading to many deaths and trapping several people below the rubble.

A few months later, in August, another hotel building, located in Taosi Township of Xiangfan County, Shanxi Province in North China, also collapsed. 

Just a week ago, in the southern city of Shenzhen, a skyscraper, one of China’s tallest, started shaking and wobbling on its own in the middle of the day. The tower was built in 2000.

The incident created chaos in the streets below as terrified pedestrians ran for their lives.

But, as frightening as these occurrences are, they are not something that started happening recently.

The Fengcheng Power Station situated in the city of Fengcheng in Jiangxi province, collapsed in 2016, resulting in at least 74 deaths.  

In 2012, the Yangmingtan Bridge – then the longest in northern China, collapsed. The construction of the bridge was completed in 18 months, half the specifically analysed construction period.

Another building crashed down in 2009; a 13-storey residential apartment building, situated in Minhang District of Shanghai on June 27th of that year, killing at least one person. 

And this was just a year after the 2008, Wenchuan earthquake in Szechuan when over 7000 classrooms collapsed resulting in the deaths of over 5000 school children. 

For the Chinese government, this event garnered a lot of criticism, both domestically and internationally. Grieving parents raised issues as to how even newly built schools tumbled to the ground while the older structures nearby often remained intact.

Discussions ensued that showed buildings in China are not built with requisite standards. The Premier of China at the time surveyed the damage and concluded that China has a staggering amount of junk infrastructure and buildings. 

Advocating lax standards for construction, corner-cutting, corruption and pugnacious competition is what leads to the frequent crumbling of buildings in Beijing and around the country.

As per Executive Vice President Liang Wei of the Urban Planning Design and Research Institute of Tsinghua University, buildings do not collapse on their own.

 Any structure that collapses instantaneously must have not been built to standards conforming to city planning.

‘Made in China’ is not just a concern for other nations, but citizens of China are themselves struggling with it. 

In general, building collapses due to structural failures are not common. They are rare occasions that become classic textbook cases for future architectural studies.

But China has a lot of Tofu-dreg projects. The rapid rate of construction seen across China coupled to other human engineering activities has led to repeated examples of human fatalities. 

The mindset of the Chinese is to build it new and when it gets old (20 years by Chinese standards), tear it down and build again. Building maintenance, unfortunately, is not a priority in China. 

Many people have reported that poor construction methods keeps foreign property buyers at bay.

People keep building massive infrastructure projects and cities to gel with fast economic growth. But it serves as a predicament for the authorities as construction constitutes a major proportion of GDP for China.

If this construction stops, there will be a sharp decline in China’s GDP.

The country has a very detailed and strict building code with many safety issues referenced to the International Conference of Building Office (ICBO).

The problem is not the lack of laws, it is the lack of implementation by the authorities.

Image: 서울특별시 소방재난본부 소장 사진

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