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China economy

Shanghai warns developers against rush to finish projects after three die at construction site

  • Workers died after earth collapsed at project run by Vanke
  • City authorities say they will step up safety checks amid concerns developers are racing to finish projects
PUBLISHED : Sunday, 30 December, 2018, 8:18pm
UPDATED : Sunday, 30 December, 2018, 10:31pm

Shanghai’s municipal government has voiced concerns about construction site safety after three workers were killed in an accident at a site managed by one of the country’s largest developers.

The accident happened on Saturday morning when the earth collapsed near the foundations on a Vanke building site in the Minghang district of the city, according to the local authority.

Three construction workers were crushed by the collapse and later died.

The commercial project under development covers about 30,000 square metres of land and was bought by Vanke for 1.6 billion yuan (US$233 million) in September last year.

In an emergency notice published on Saturday evening, the Shanghai Municipal Housing and Urban-Rural Construction Administration, which regulates the city’s property market, said many construction firms were racing to finish projects .

It asked officials at all levels to increase safety inspections at construction sites and hand out punishments to firms that fail to fulfil their responsibilities.

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Vanke, which is listed in Hong Kong and Shenzhen, said in a statement on Saturday that it had halted all work building foundations to carry out safety checks.

The firm said it is cooperating with the authorities to investigate the cause of Saturday’s accident.

This accident in Shanghai is the latest in a series of safety problems this year, as many cash-strapped Chinese developers have sped up construction on their projects so they could begin sales before the economy slows further and while local governments remain hesitant to ease curbs on the sector to combat the slowdown.

In the first half of this year, the number of construction accidents rose by 7.8 per cent to 1,732 nationwide, while the death toll increased by 1.4 per cent to 1,752.

Vanke has been burning through cash as such a fast pace this year that the company’s chief executive Yu Liang warned a company meeting in September that the firm’s “survival” was at stake.

By the end of that month, Vanke still held cash of about 132 billion yuan (US$19.2 billion) which allowed it to cover its short-term debt of around 86 billion yuan, according to its third-quarter interim report to Hong Kong stock exchange.

But during the first nine months of this year, the developer had a net cash outflow of more than 25.7 billion yuan, compared with a net inflow of 16.7 billion yuan in the same period last year.

Beijing protest by angry Vanke homebuyers grows

As its financial fortunes have dimmed, the developer has faced a slew of negative publicity about accidents at its construction sites and complaints from angry homebuyers over the quality of their properties.

On November 12, a car park rooftop partially collapsed in a Vanke residential project in the city of Zhongshan in Guangdong province, though no one was killed or injured.

Protests erupted outside Vanke’s Beijing headquarters in late October when buyers of multimillion yuan flats developed by Vanke vented their anger at what they described as serious quality issues – such as the low ceilings and small shower rooms – and demanded compensation from the developer.

Country Garden, China’s largest developer by sales, also suffered from a series of construction accidents this year.

In July, six workers died after an entire construction site run by the company in eastern Anhui province collapsed in heavy rain and high winds.

In June, a person died at another company site in Shanghai and the following month a massive sinkhole opened up at one of its sites in Hangzhou although no one died in that incident.