According to Caixin, some property developers in the central Chinese city of Zhengzhou pretend to restart construction on stalled projects because they do not have enough funds.
Caixin cited sources reporting that the Zhengzhou government last month told real estate developers to resume construction on delayed residential projects by October 6. However, work has not restarted on nearly 40% of the about 100 halted projects.
Starting in late June, mortgage boycotts have spread across the country as developers failed to deliver promised residential projects on time due to insufficient funds. Zhengzhou has become a hot spot as it has more delayed projects than other areas.
In order to restore confidence in the sector, the local government offers many measures, including a 30-day deadline for developers to resume construction work on all suspended projects in the area.
However, according to Caixin, construction on some projects can not be restarted as developers are short of funding. In addition, for those projects that have resumed, the construction work can not be guaranteed to finish because the funding is limited.
Source told Caixin, “The developers of several projects even hired a few workers to go to the construction sites and pretend to restart work just to get past government inspections.”
The property crisis has been hitting China’s economy hard, and authorities are trying to ease the problem by unveiling multiple measures.
Last week, Bloomberg reported that the People’s Bank of China and the China Banking and Insurance Regulatory Commission told six state-owned banks to provide over $84 billion (600 billion yuan) in real estate funding.
In August, Chinese authorities reportedly also planned to provide property developers with special loans worth $29 billion (200 billion yuan) to ease their troubles.
China’s center has lowered the interest rate twice to support the troubled sector.
However, there is no sign of recovery in the industry despite those efforts from authorities.
Official data shows that home prices in the country reported a 12-month consecutive decline, with 50 cities posting home price declines in August, up from 40 cities in July.
Figures also show that China’s residential sales dropped about 30%, and property investment shrank by over 7.4% for the first eight months.