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China debt crunch

'No money': The human toll of China Evergrande's financial crisis

Unpaid workers in limbo as property developer's debts rack up

An unfinished theme park in Taicang that is part of the Evergrande Cultural Tourism City
An unfinished theme park in Taicang that is part of the Evergrande Cultural Tourism City. (Picture by CK Tan)

SHANGHAI -- As China Evergrande tries to claw its way out of financial crisis and global markets fret over its fate, the lives of the ordinary people who work for the property developer and its many contractors are on hold.

On Thursday, about 10 middle-aged people gathered in front of the entrance to the group's sales office in Taicang, a provincial city next to Shanghai.

Sitting on plastic stools and laying out what appeared to be maps of a development project, they have been coming to this spot for days, protesting outstanding payments.

"Evergrande may have defaulted on bond payments as the media reported," said the group's leader, a man who only identified himself as Li. "That's its problem. We just want what's due to us."

A subcontractor who provided landscaping services in Evergrande's 110 billion yuan ($17 billion) mixed development in Taicang, Li said Evergrande's contractor owed his company 15 million yuan for work over the past two years.

"The contractor disappeared a few months ago and we could only turn to Evergrande because it is the developer," he said. Pointing to his workers, some including working mothers, to whom he owes months of salary, Li said he could only placate them by bringing them to the protest.

Such protests are a rare sight in China and in Li's case, he and other subcontractors are demonstrating quietly.

Protestors stake out at an Evergrande Group sales office in Taicang City on Thursday to claim unpaid works Protesters stake out at an Evergrande sales office in Taicang City to claim unpaid bills. (Picture by CK Tan)

"We don't want to block the entrance entirely as there are customers who still come in here to buy houses," said Li. "We unfurled a protest banner a few days ago but stopped after the police intervened."

A police car was parked near the sales office, a deterrent to the protest growing.

Evergrande hyped the Taicang project for its "core location" in the Yangtze River Delta, a megacity development cluster envisioned by President Xi Jinping to stimulate domestic consumption by drawing high-tech investment in the country's more developed eastern coastal region.

Designed over a sprawling 5 sq. km of what used to be agricultural land, the project, Evergrande Cultural Tourism City, involves homes, retail space, hotels and health care centers. The highlight is a nearly completed "international standard" theme park aimed at drawing visitors from the more affluent Shanghai.

Like more than half of Evergrande's 800 projects nationwide, works at the park began being gradually suspended a few months ago, as the company struggled to deal with over $300 billion of debt and as the unpaid bills to contractors started racking up.

"There were many security guards before, but they left," said a gardener watering plants at the theme park entrance. "I am leaving at the end of the month, too," she said, adding that she has four months' salary overdue.

Some 70 km away at Evergrande's Riverside Mansion construction site in Suzhou City, a man stood guard at the entrance security post.

"No money," he said when asked why there were hardly any workers. "The contractor has not been paid by Evergrande."

Identifying himself only as Zhang, he said security guards who were paid a meager 100 yuan per day left last month, leaving him, a building safety supervisor, to guard the post along with a handful of odd laborers.

In its heyday, about 300 workers raced to erect a total of 19 high-rise apartments for delivery in 2023. Behind Zhang, a few half-completed towers stood idle without any sign of work.

In the sales brochure, Evergrande promised the comfort of an elevator shared by just two households per floor in an environment surrounded by ecology parks.

Half-finished Evergrande Group Riverside Mansion in Suzhou city Evergrande's half-finished Riverside Mansion in Suzhou city. (Picture by CK Tan)

Designed to be a new luxury landmark on the outskirts of Suzhou, known for its century-old canals and as an industrial hub, the complex has been on hold since last month.

Still, Zhang, a migrant worker from Lichuan county in Hubei province, nine hours away by train, is staying put.

"I still have two boys to support," he said. The elder, he explained, is a sophomore who needs 2,000 yuan a month as living expenses, while the other, who entered college this year, needs 1,500 yuan.

Construction workers like Zhang only receive their living expenses on a monthly basis, in his case 2,500 yuan, with the balance of another two thirds to be paid in one lump sum before the Lunar New Year.

Trying to convince himself, Zhang said he will get his balance by year-end. "It's my hard-earned money and moreover, I have been with the company for three years."

Zhang said he was told by the management that local authorities have intervened between banks and Evergrande's contractors to ease loan disbursements. "Once the payment is out, we will resume full-scale work next month," he said.

At the Evergrande sales office nearby, a notice at the entrance alerted buyers of Riverside Mansion homes to a holdup in delivery due to the delay in construction. Evergrande will honor late delivery penalties set out in mortgage agreements, the notice said.

"We are working with the authorities to revive operations," said a salesperson, without saying when full-scale construction could restart.

A similar situation is being played out across the country as disgruntled homebuyers and contractors air complaints on social media. At Evergrande's headquarters in Shenzhen, investors in its wealth management products protested that they had not been repaid.

Xu Jiayin, Evergrande's founder and chairman, has expressed optimism it will resolve its financial woes, even as its shares plunged and it skipped a payment to international bondholders.

"We should raise our self-awareness, unify our thoughts and devote ourselves to ensure the resumption of work and production to meet home deliveries," Xu told some 4,000 executives on Wednesday, according to several media outlets including state-owned China Securities Journal.

But with no sight of payment forthcoming from Evergrande, Li the landscaping contractor, said he would continue his stakeout every day until his group's plight is heard.

"It may be futile but who else could we turn to," he said with a faint smile.

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