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The real estate market still frozen in China

Published: 20 Oct. 2024, 19:33

LEE DO-SUNG
The author is a Beijing correspondent of JTBC.

I spotted a large apartment complex in Langfang City, Hebei Province, about 100 kilometers (62 miles) from downtown Beijing. I was driving back to Beijing and was on a freeway. Nine 15-story apartment buildings stood tall over the empty field. At the top, I could see bent steel bars. The buildings had only gray skeletal structures and stopped going up. The 400,000 square meter (99 acres) complex was full of weeds. It seemed that it was left untouched for a while, with the iron main gate shut with a rusty lock.

It is one of the “lan wei lou,” or unfinished buildings. “Lan wei” means “bad ending,” and “lou” means buildings. About 10 minutes’ drive from the complex stands another lan wei lou. The three-story structure was supposed to be a luxury villa, but it was filled with construction material. The site was covered with a screen, and construction waste was piled up in front of it. A local resident said that there are several unfinished buildings in the area which have been abandoned for years.

The bubble in the Chinese real estate market grew for 40 years and started to burst in 2021, when China’s biggest real estate developer, Evergrande, defaulted. The driving force of China’s growth became an obstacle to its economy that was losing power. In major cities like Beijing, it’s not hard to find unfinished high-rises. As you get farther away from the economic center, more lan wei lou buildings are left abandoned. According to the Wall Street Journal, there are more than 90 million vacant houses in China.

The Chinese government has come up with a series of economic boosters to meet its economic growth target of around 5 percent. On Oct. 17, a day before announcing the country’s third quarter GDP, the government presented real estate market measures. The real estate sector and related industries, such as construction, account for about one third of China’s GDP. To revive the slow real estate market, the authorities plan to increase healthy real estate loans to 4 trillion yuan ($562 billion) and redevelop 1 million homes in slum areas.

After a large-scale economic stimulus package was announced at the end of September, the real estate market started to move, with housing purchases increasing in large cities after China’s biggest holiday. Real estate market revival will surely boost the sluggish Chinese economy. But I am reminded of the neighbor of the lan wei lou. “They all belong to out-of-towners, and I have nothing to do with the completion of the apartment,” he said.