“No money”: the human toll of the Evergrande financial crisis in China

SHANGHAI – As China Evergrande tries to emerge from the financial crisis and global markets worry about its plight, the lives of ordinary people who work for the real estate developer and its many subcontractors are on hold.

On Thursday, a dozen middle-aged people gathered outside the entrance to the group’s sales office in Taicang, a provincial town near Shanghai.

Sitting on plastic stools and drawing up what seemed to be the cards of a development project, they have been coming to this place for days to protest overdue payments.

“Evergrande may have defaulted on the bond payments as the media reported,” said the head of the group, a man who only identified himself as Li. “That’s his problem. We just want what is owed to us.”

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

“The entrepreneur disappeared a few months ago and we were only able to turn to Evergrande because he is the developer,” he said. Pointing out his workers, some including working mothers, to whom he owes months of wages, Li said he could only appease them by bringing them to the protest.

Such protests are rare in China, and in Li’s case, he and other contractors demonstrate quietly.

Protesters go to an Evergrande sales office in Taicang town to demand unpaid invoices. (Photo by CK Tan)

“We don’t want to completely block the entrance because there are still customers who come here to buy houses,” Li said. “We displayed a protest banner a few days ago but stopped after the police intervened.”

A police car was parked near the sales office, curbing the growing protest.

Evergrande touted the Taicang Project for its “central location” in the Yangtze River Delta, a mega-city development hub that President Xi Jinping envisions to boost domestic consumption by attracting high-tech investment to the country’s more developed eastern coastal region.

Designed over an area of ​​5 km² of what was once agricultural land, the project, Evergrande Cultural Tourism City, involves homes, commercial spaces, hotels and healthcare facilities. The highlight is an “almost completed international standard” theme park intended to attract visitors to the more affluent city of Shanghai.

Like more than half of Evergrande’s 800 projects nationwide, work on the park began to be phased out a few months ago, as the company struggled to keep up with more than $ 300 billion in funding. debts and unpaid bills to contractors began to pile up.

“There were a lot of security guards before, but they left,” said a gardener, watering plants at the entrance to the theme park. “I’m also leaving at the end of the month,” she said, adding that she was four months behind in pay.

Some 70 km away, at the Evergrande 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 was not paid by Evergrande.”

Identifying himself only as Zhang, he said security guards who were paid a measly 100 yuan a day left last month, leaving him, a building security supervisor, to keep the job with him. a handful of workers.

At its peak, around 300 workers rushed to erect a total of 19 high-rise apartments to be delivered in 2023. Behind Zhang, a few half-completed towers were idle with no sign of work.

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

The semi-finished mansion of the Evergrande Riverside group in the city of Suzhou
The half-finished Riverside Mansion of Evergrande in Suzhou City. (Photo by CK Tan)

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

Yet Zhang, a migrant worker from Lichuan County in Hubei Province, nine hours by train, remains behind.

“I still have two boys to look after,” 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 two-thirds to be paid all at once before the Lunar New Year.

Trying to convince himself, Zhang said he would get his balance by the end of the year. “It’s my hard earned money and on top of that, I’ve been with the business for three years.”

Zhang said management told him that local authorities intervened between banks and Evergrande sub-contractors to facilitate loan disbursements. “Once the payment is made, we will resume full-scale work next month,” he said.

At the nearby Evergrande sales office, a notice at the entrance alerted buyers of Riverside Mansion homes of a late delivery due to late construction. Evergrande will honor late delivery penalties provided for in mortgage contracts, according to the notice.

“We are working with the authorities to relaunch operations,” one seller said, without saying when full-scale construction might restart.

A similar situation is unfolding across the country as disgruntled homebuyers and contractors spread complaints on social media. At Evergrande’s headquarters in Shenzhen, investors in its wealth management products protested that they had not been reimbursed.

Xu Jiayin, founder and chairman of Evergrande, expressed optimism about solving his financial woes, even as his stocks plunged and he skipped a payout to international bondholders.

“We need to raise our self-awareness, unify our thoughts and focus on ensuring the resumption of work and production to meet home deliveries,”” Xu told some 4,000 executives on Wednesday, according to multiple media outlets, including the state-owned China Securities Journal.

But with no forthcoming payment from Evergrande, Li, the landscaping contractor, said he would continue monitoring daily until his group’s plight was heard.

“It may be futile, but who else can we turn to,” he said with a slight smile.

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