Real Estate Downturn in China Leaves Industry Workers Struggling
The real estate sector, once a leading industry in China’s economy, has turned from prosperity to cries of distress under the abnormal stimulation and high-profile suppression by the Chinese Communist Party. The policymakers responsible for the related policies have not been held accountable, and yet the construction industry and ordinary households are left to bear the consequences.
This year, Mei Zhou Heng, who hails from Changsha, Hunan Province, shared the grim state of the industry. Mei Zhou Heng, 39 years old, worked as a top-level construction engineer and project manager in China before moving overseas. He described the industry’s plight, with many government investment projects shrinking, leaving many unfinished.
In the past, millions or tens of millions of rural construction workers found themselves jobless starting from the past year or two. They found themselves idle at home for long periods after the Chinese New Year, waiting because construction sites were either inactive, unfinished, or lacking new projects.
Experienced engineers and technical staff in civil engineering have also faced unemployment. Mei Zhou Heng mentioned that even with slightly better roles, such as road and bridge construction, challenges remain due to the end of China’s infrastructure investment boom.
The industry has shifted towards Public-Private Partnership (PPP) projects, where construction units bring in funding and partly invest in projects themselves. However, with dwindling opportunities, many highly profitable highway projects have failed to attract bidders, leading to bankruptcy fears for those involved.
Moreover, many firms have resorted to downsizing and layoffs, especially affecting mid-level management and skilled workers. The industry has seen a significant rise in unemployment, leaving many with years of experience struggling to secure new positions.
With the collapse of the real estate market, construction, contracting, and property development have suffered a similar fate. Mei Zhou Heng’s experiences reflect a relatively fortunate situation, while many of his peers and former colleagues face joblessness.
As construction industry workers grapple with unemployment and bankruptcy, middle-class individuals with around 60% of their wealth tied to property ownership are burdened with massive debts. Layoffs, salary cuts, and financial difficulties have become common among this segment.
In Shenzhen, Peng Xiaoliang, who works in the construction industry, emphasized the bleak outlook across various sectors, including construction, building materials, catering, trade, and electronics. The oversupply of housing and declining demand have led to an abundance of incomplete projects, leaving many in the industry unemployed or underemployed.
Faced with mounting debts, middle-class individuals find themselves in dire straits. Peng Xiaoliang’s friends in Shenzhen struggle to repay mortgages, with some on the brink of financial collapse as property prices plummet.
In Wuhan, nurse Zhang Yu shared the story of a friend who bought a home with high hopes during the boom in property prices but is now grappling with mortgage debts surpassing the property’s value. The friend, formerly employed at Huawei, lost her job due to pregnancy and now relies solely on her husband’s income.
These personal accounts offer a glimpse into the harsh realities faced by individuals in the construction and real estate sectors in China. Unemployment, indebtedness, and financial challenges have become widespread, painting a grim picture of the industry’s current state and the struggles of those affected.