[News Terms] China's Time Bomb 'Lan Weirou'

Construction Halts Multiply Amid Ongoing Economic Recession
Despite Xi Jinping Emphasizing Completion, Contractors Remain Unmoved

'Lanweilou (爛尾樓)' is a term in Chinese that means 'a house with a bad ending,' 'a house with poor finishing,' or 'an unfinished apartment.' It generally refers to buildings such as apartments where construction has been halted and left abandoned for more than a year.

In China, due to the economic downturn and the impact of the COVID-19 pandemic, there has been an increasing number of cases where construction companies stop building apartments even after receiving full payment from buyers. Some residents who have fully paid for their units move into these halted apartment complexes. However, these buildings lack water, gas, and electricity, so residents rely on candles or solar power to meet their basic living needs inside the concrete apartments.

Chinese President Xi Jinping waved to residents during his inspection of Guangzhou, Guangdong Province in southern China on April 11.
[Photo by Guangzhou Xinhua/Yonhap News]

Lanweilou has become a major issue in Chinese society. Residents who have nowhere else to go live in these unfinished apartments and protest, demanding a resolution to the situation. However, it is not an easy problem to solve. Even Xi Jinping (習近平), the President of China, has intervened, emphasizing the so-called 'Baojiaolou (保交樓),' which calls for the completion of apartment construction and guarantees residents' move-in. Nevertheless, most construction companies remain indifferent.

During the economic boom, Chinese real estate companies recklessly pursued large-scale housing projects. They financed their projects by pre-selling apartments under construction and using the deposits received. Local governments granted pre-sale permits once the construction progress reached only 25%. However, after the COVID-19 pandemic caused an economic downturn, many construction companies, despite having received full payments, could not afford construction costs and halted their projects. This is why Lanweilou has become so widespread.

Last year, Bank of America (BOA) estimated that at least 2.4 million households in China faced delays in moving into unfinished apartments. Moreover, the real estate crisis began with the Evergrande incident in 2021, and this year, even the fifth-largest company, Biguiyuan, is on the brink of bankruptcy. Including Lanweilou, the real estate sector, which accounts for 29% of China’s Gross Domestic Product (GDP), has become a ticking time bomb for the Chinese economy.