A news report from Epoch Times on May 4, 2026 stated that Shaanxi Construction Group, a leading construction company in Shaanxi Province directly owned by the Shaanxi Provincial Government and a state-owned enterprise, reported a 92% decrease in net profit attributable to the parent company in 2025 compared to the previous year. After deducting non-recurring items, the net profit attributable to the parent company recorded a loss of 600 million yuan, representing a significant decline of 126.6%. The company, ranking as the second-largest provincial construction group in China, could not escape the impact of the real estate market downturn.
In its 2025 annual report released on April 30, Shaanxi Construction Group disclosed a decrease in operating income by 15.37% compared to the previous year. The total profit also declined by 83.31%, with net profit attributable to shareholders of the listed company dropping by 92.40%. The explanation provided for the decline in financial figures in 2025 attributed it to the effects of the market environment, slowing business growth, and reduced construction revenue.
As the company entered the first quarter of 2026, its operational situation did not show signs of improvement. According to the first-quarter report for 2026 released on the same day as the annual report, operating income decreased by 10.9% year-on-year, and total profit dropped by 54.39%. The net profit attributable to the listed company’s shareholders decreased by 57.20%, while the net profit after deducting non-recurring items declined by 63.39%. The continuous decline in performance indicated escalating operational pressures.
Public data revealed that Shaanxi Construction Group is a major state-owned construction giant in Shaanxi Province, engaging in various sectors such as residential construction, municipal projects, infrastructure, and renewable energy projects. The company has consistently ranked among the top 500 Chinese enterprises and serves as a leading player in the construction industry in northwest China.
Even as the second-largest provincial construction group in China, Shaanxi Construction Group, a state-owned enterprise, could not escape the ongoing operational challenges imposed by the stagnant Chinese real estate industry.
According to a report from “China Real Estate News” on May 3, substantial credit impairment losses were identified as a core reason for devouring the company’s profits. Combined with the continuous transmission of risks in the real estate sector and delayed returns on local projects, it starkly exposed the survival dilemma of regional construction giants deeply entwined in the real estate chain.
The announcement by Shaanxi Construction Group on April 39 stated that a total of 695.14 million yuan was recognized as credit impairment losses in 2025, with various categories such as bad debt losses on accounts receivable contributing to this figure. Additionally, a total of 209.75 million yuan was provisioned for credit impairment losses and asset impairments in the first quarter of 2026.
A real estate industry observer commented to the media that the dual pressure from the real estate market and local finances led to a significant increase in bad debt on accounts receivable for Shaanxi Construction Group. The company, being a major player in domestic residential construction, faced continuous exposures to defaults by real estate enterprises in 2025, resulting in numerous residential and commercial projects being halted or left unfinished, making the recovery of project funds challenging. Simultaneously, the financial strain on local finances in Shaanxi and the northwest region led to widespread delays in government-backed projects (municipal, road construction, affordable housing, etc.), prolonging accounts payable periods.
As per the 2025 annual report of Shaanxi Construction Group, Evergrande Group, Greenland Holdings, and Blu-ray Development were the main sources of reduced valuation and provisions by Shaanxi Construction Group. Companies like Sunac China and Sunlight City, collaborating on regional projects, shared similar risks of bad debts. With mounting debt crises and project suspensions in real estate enterprises, significant overdue project payments resulted in a gradual accumulation of substantial bad debts.
The year-end financial figures in 2025 showed that Shaanxi Construction Group’s accounts receivable and contract assets exceeded 170 billion yuan, accounting for around 50% of total assets. A large sum of funds being tied up in accounts receivable reduced cash flow efficiency, and uncertainty persisted in recovering overdue payments. Moreover, the company’s debt-to-asset ratio remained high at 89%, indicating continuous high pressure for short-term debt repayment and accumulating financial risks. Additionally, the declining gross profit margin in the core construction business, ongoing downward trend in bid prices, fluctuations in raw material prices, and high financial expenses collectively limited the company’s profit margins.