Massive unpaid debts in Beijing's construction sector could damage the industry's future and lead to social instability, warned Zhang Xueyuan Sunday, a publicity official with the Beijing Municipal Statistics Bureau.
According to an official report from the bureau, various projects around the city had shirked as much as 43.2 billion yuan (US$5.2 billion) in bills due to construction company's as of last year's end, the highest in the country for the period.
Of all construction companies doing business in the Chinese capital, 41.9 percent are owed money for completed work.
While the total output value of Beijing's construction industry for last year increased by 18.8 percent over that of the previous year, the corresponding increase in debt was 29.8 percent.
Many construction companies are forced to take bank loans to carry on daily operations and must shoulder extra interest costs, so receiving timely payment is a matter of survival for them, said Zhang.
The outstanding debt has also affected workers as some companies have been unable to pay their staff and migrant laborers from the countryside due to a shortage of funds.
This situation resulted in problems before this year's Spring Festival in early February, when most migrant laborers return home with their yearly earnings for the most important family holiday in China.
Consequently, the municipal government had to step in and force some construction companies to pay these workers.
Local construction companies failed to pay 3 billion yuan (US$362 million) to migrant laborers in 2002. Fortunately, two-thirds of the outstanding pay was remitted before this year's Spring Festival.
An official, who wished to remain anonymous, with the Beijing Urban Rural Construction Group, which alone has 7.6 billion yuan (US$918 million) in unpaid debts, the highest among local construction companies, applauded a new order from the municipal construction authority, which demands construction companies pay their migrant laborers every year before the Spring Festival.
But he told China Daily via telephone that staff from some branch companies of the group had to donate funds to pay migrant laborers before last Spring Festival.
"This kind of thing will not solve the problem," he said.
The bureau's official report suggests local construction authorities prevent new projects from starting if the proprietors are not financially capable.
(China Daily March 31, 2003)
