Chengdu Homeowners Protest Inadequate Regulation of Property Development

October 26, 2005

Members of over 400 households gathered on the streets of Chengdu, Sichuan province, to hold a press conference protesting the government's inadequate regulation of a local development company, according to an October 15 Radio Free Asia (RFA) report. Riot police eventually dispersed the crowds. A Chengdu Economic Daily report revealed that more than 80 households filed a complaint against the same company with the local investigative unit of the public security bureau on October 10, identifying themselves as victims of fraud.

Members of over 400 households gathered on the streets of Chengdu, Sichuan province, to hold a press conference protesting the government's inadequate regulation of a local development company, according to an October 15 Radio Free Asia (RFA) report. Riot police eventually dispersed the crowds. A Chengdu Economic Daily report revealed that more than 80 households filed a complaint against the same company with the local investigative unit of the public security bureau on October 10, identifying themselves as victims of fraud.

The homeowners held their press conference after some of their number had failed in attempts to petition the Chengdu housing administration bureau and sue the developer, Chongqing Kang Fa Company, in court. In early 2003, the Chengdu branch office of Chongqing Kang Fa Company began advance sales of small family homes and signed agreements with individual households that allowed them to move into the "Zhihua Shi" complex beginning on April 20, 2004. The Chengdu Economic Daily article reported that the company had sold some units to multiple prospective homeowners. To date, the company has failed to complete construction, but refuses to return money paid in advance by the homeowners. The Chengdu branch office can no longer be reached at its former business address, leading news reports to refer to both the company and purchase funds as having "evaporated."

Homeowners told RFA that they confirmed the company’s legitimacy before making their purchases, through the local housing administration bureau that oversees and issues permits to real estate developers. In April 2004, once it became apparent that the homeowners could not move in as expected, they formed a small advocacy group to petition through administrative channels. They also attempted negotiations with the district government and the development company, but these talks collapsed when the homeowners learned that the district government supported the developer. In June 2005, over 100 homeowners began a lawsuit to reclaim their purchase money, but the court threw the case out because the company had not registered a company address and thus could not receive the court summons.

The Chengdu press conference took place just before an October 18 New York Times report (registration required) raised the specter of rampant land speculation and a property bubble in China. In February, a corruption scandal drew attention to a senior Chengdu official's involvement in illegal land deals. The Beijing News reported that seven government bureaus, including the Ministry of Land and Resources, issued directives in May that called on local administrators to exercise tighter controls to restrict developers' profits and limit land speculation.