The thick mist gives the landscape a bucolic air: at the bend of a dark green mountain, a vast valley appears, where clusters of buildings under construction are placed. About ten kilometers north of downtown Guiyang, the capital of Guizhou province in southern China, the Ouxiang (“our village”) project covers 600 hectares. Launched in 2018 near a high-speed train stop, it was to be able to accommodate 12,000 people in around forty towers, and also promised ten kindergartens, four primary schools and two colleges. But, in this late autumn, no noise comes to disturb the calm of the scene: not the slightest activity on the surrounding construction sites.
In front of an imposing auction room built in a traditional style, with its large painted wooden gates and curved roofs, a guard is pacing up and down, wrapped in a thick black coat with a Mao collar. Mr. Wang, 30, is employed by Zhongtian, the bankrupt developer, who razed his village five years earlier to make way for the compound. He should have received an apartment in compensation at the end of 2020. But, that year, the work stopped: crippled with debts, Zhongtian no longer had the means to pay the subcontractors, leaving dozens of companies on the straw and thousands of owners waiting for housing, paid in advance. In the meantime, Mr. Wang receives a meager compensation and this small job that the promoter offers to the evicted inhabitants.
After thirty years of an almost continuous boom, the Chinese real estate market entered a severe downturn in mid-2021. Sales for the top 100 developers fell 42.6% in the first eleven months of 2022, according to figures from China Real Estate Information Corp. The government partly caused this crisis by wanting to tighten the screws on the most indebted promoters: in August 2020, the Chinese central bank set up “three red lines” accountants to real estate developers who wish to finance themselves with banks.
As a result, the most indebted developers have found themselves in great difficulty for more than a year, to the point of having to suspend their construction sites. The case of Evergrande, former number one in the sector and the most indebted company in the world with 300 billion euros in receivables at the end of 2021, is the best known example: the company has been in default of payment for a year, like many Chinese promoters, including Zhongtian in Guiyang.
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