Building Predatory States: Unfinished Construction Projects in China

• In Event: Institution Building in Historical and Contemporary Contexts

Abstract

Unfinished construction projects are among the most visible manifestations of developmental mismanagement. After China’s central government restricted real estate financing in June 2022, the phenomenon of partially constructed residential buildings reached crisis proportions nationally, as homeowners boycotted making mortgage payments and demanded compensation for their losses. Beijing immediately issued a political mandate urging local governments to resume abandoned construction projects. This top-down edict unleashed various forms of predatory behavior by local governments towards key stakeholders, including private property developers, homeowners, and financial investors. Drawing on policy documents, news reports, existing literature, online ethnography, and field interviews with relevant actors in multiple cities, this paper documents how local governments have coped with the combination of heavy pressure from the central government and severe fiscal shortages within their jurisdictions. The resulting coping strategies, we argue, mark a shift from a developmental approach towards the local economy to organizational predation , as reflected in local governments’ opportunistic exercise of regulatory power, revenue-maximizing approach to housing sales, and ad hoc property rights adjustments. Analytically, this case study of China’s housing crisis contributes to the political economy literature on inter-governmental relations by demonstrating how mandates from above may have the unintended consequence of incentivizing predatory rather than developmental behavior from below.

Authors

• Aidong Li, Brown University

• Kellee S. Tsai, Hong Kong University of Science and Technology