In Jinan, Shandong Province, the resettlement housing project in Lijia Bu Village, Dongxigou, Zhangqiu has been completed and handed over to residents for over two years. However, the dispute over project funds remains unresolved. The subcontractor of the project, “Jin Cheng Labor Service,” has accused the general contractor, “China Railway 19th Bureau Jinan Company,” of withholding construction funds and advance payments totaling over 70 million yuan, leading the company into financial difficulties and facing multiple lawsuits.
According to a report by Xin Huang River on September 4th, Wang Hua (pseudonym), a construction supervisor responsible for the project site subcontracted by Jin Cheng Labor Service, said, “For over two years since the completion of the project, my colleagues and I have been communicating with China Railway 19th Bureau Jinan Company in Zhangqiu to address the outstanding payments.”
In September 2019, Jin Cheng Labor Service signed a “Construction Engineering Labor Subcontracting Contract” with China Railway 19th Bureau Jinan Company regarding the aforementioned site. According to the contract provided, the subcontracting scope of Jin Cheng Labor Service includes all residential buildings, ancillary public facilities, underground garage, heat exchange station, and other supporting facilities of Site A, with a total project contract amount of approximately 237 million yuan. In accordance with the project construction progress milestones, the construction party is supposed to pay the corresponding labor remuneration.
Wang Hua stated, “We have completed all construction tasks as stipulated in the contract. After the project was handed over for use in March 2023, residents were relocated and moved in. However, the counterpart still has not paid around 39 million yuan of construction funds on time. During the construction period, the industry also encountered some uncontrollable factors, resulting in additional costs related to adjustments in labor, machinery, and materials of around 40 million yuan, most of which were self-financed by us.” Wang Hua calculated the total outstanding construction funds and other expenses owed by the counterpart to exceed 70 million yuan.
After the entire project was handed over in March 2023, Jin Cheng Labor Service began to submit settlement materials according to the process and requirements. Wang Hua said, “The relevant personnel on the counterpart’s side even established a WeChat group for settlement purposes, but for nearly two years, the settlement has not been completed.”
“The response given by the personnel of China Railway 19th Bureau Jinan Branch is that the audit has not been completed,” Wang Hua said. Due to the large amount of debt, Jin Cheng Labor Service has fallen into financial difficulties. “We owe loans and material payments to suppliers, and some workers’ wages cannot be paid on time. We have already been sued by multiple creditors in court.”
According to corporate equity disclosure information, the resettlement housing project of Lijia Bu Village in Dongxigou, Zhangqiu is implemented by Zhangqiu Huinong Xin New Rural Construction Investment and Development Co., Ltd., with Zhangqiu Holdings Group as the major shareholder.
On September 3rd, the relevant person in charge of China Railway 19th Bureau Jinan Company responded, stating, “We have already paid over 85% of the construction funds to the counterpart, with around 30 million yuan remaining unpaid. We will make the payment after the audit settlement is completed with the principal. In addition, Jin Cheng Labor Service submitted an additional approximately 40 million yuan in costs outside the contract, which we believe are inflated, and there are disputes between the two parties regarding these expenses.”
An employee of Zhangqiu Holdings Group stated, “A week ago, I was still coordinating both parties to promptly submit relevant settlement materials as required. Currently, we have not completed the settlement with China Railway 19th Bureau Jinan Branch, and indeed, some construction funds are still unpaid. However, the additional costs submitted by Jin Cheng Labor Service outside the contract are high, leading to disputes between the two parties, and we recommend resolving them through legal means.”
After the dispute was exposed by the media, it sparked discussions among netizens. Some directly mentioned the issue of “defaulters” within “Chinese-headed” companies (referring to state-owned enterprises starting with “China”) and believed that such companies are difficult to deal with. Others pointed out that these large enterprises usually subcontract labor service companies to evade social security and other responsibilities, viewing it as an unwritten rule in the industry.