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Over the past two decades, real estate has grown to become a pillar industry in China, accounting for about 13 per cent of the country's GDP by the end of 2021. But for about three years, many real estate developers have been unable to complete residential projects because of funding shortfalls, as the nation’s economy struggles under tough restrictions meant to prevent the spread of Covid-19. Projects that have stalled are known in Chinese as lanweilou or “rotten tail” buildings and there are thousands of such unfinished structures across China. Homebuyers routinely finance construction of flats long before they are completed, as developers insist on down payments of at least a 20 per cent as they promise that projects will be done within a few years. Buyers have pushed developers and local governments to solve the problem with little success. But in July 2022, owners of more than 300 residential compounds in China began a boycott, refusing to make mortgage payments until developers finish their projects. Amid concerns that boycotts could challenge China’s banking and financial system, government officials have introduced policies that aim to resolve the property crisis as they urged local governments and developers to work together to restart the halted projects.
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