Four people were killed when a powerful storm ripped through Nanchang in China’s Jiangxi province, damaging more than 5,000 homes. Three of the victims died when high winds sucked them through the closed windows of their new apartments. Another 1,600 people were evacuated, and the winds, estimated to be near hurricane force, tore air conditioning units from windows and toppled more than 2,000 trees.
Questions about build quality
Although the storm packed a punch, the extreme damage it inflicted on brand new buildings led many observers to question the quality of their construction and whether corruption played a role in the homes’ commissioning at all. In addition to the destruction that led to the three fatalities, the storm tore stainless steel fixtures from interior walls and displaced entire building frames.
It’s extreme damage for a storm that arrived with winds just below Category 1 hurricane strength. Angry citizens speculate that developer Wei Meng Group may have used substandard materials to build their many projects in Nanchang, according to Vision Times. Even before the storm, residents of the Wei Meng developments complained about load-bearing walls with cracks and balconies that shook during high winds.
Do not miss it:
A real estate developer with a problematic past
According to Vision Times, Wei Meng Group has already been the target of a successful anti-corruption investigation and trial that led to the company’s founder, Li Mengpeng, being jailed on bribery charges. The case, which was just part of the government’s highly publicized crackdown on corruption in China’s real estate sector, exposed a long-standing culture of cronyism and kickbacks that has plagued the entire sector.
The corruption stems in part from the high level of control that local and central governments exert over private industry in China, including the real estate sector. This leads to a situation where the most appropriate way to greenlight a project is to gain the support of a political apparatchik with influence in the regional and central government.
Popular
Once developers get this support, their benefactors can have a variety of rules changed or relaxed to keep projects on track, including things like raising maximum occupancy limits, lowering material quality standards, or expediting occupancy permits over the objections of local building officials. and security officials. Naturally, the developers pay a fee for these services, and most people would call that fee a bribe.
The downside of corruption in real estate
This kind of corruption and collusion between private developers and government officials has become accepted as part of doing business in China. In many ways, the ease with which developers can use government officials to help them obtain loans, construction permits and other considerations is one of the main reasons for China’s real estate boom.
The University of Chicago Booth School of Business studied the boom in Chinese private industry and concluded: ‘Private companies succeed in China by getting a special deal from a local political leader, which allows them to either break formal rules or gain favorable access access resources. This practice is common in countries with poor formal institutions, and China is no different.”
It is not entirely clear that the Wei Meng Group development disaster in Nanchang is a byproduct of that corruption, but people have started investigating all of the Wei Meng Group’s Nanchang construction permits. Whatever these investigations reveal, this incident is yet another black eye for a Chinese real estate sector that already appears to be under siege from all sides.
Read next:
“SECRET WEAPON OF ACTIVE INVESTORS” Boost your stock market game with the #1 trading tool for “news & everything else”: Benzinga Pro – Click here to start your 14-day trial now!
Want the latest stock analysis from Benzinga?
This article Three Chinese citizens killed after a storm pulled them out of closed windows in a new housing estate. Is public corruption to blame? originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
