ZHENGZHOU: The Chinese housing crisis continues to wreak havoc on the lives of homebuyers, leaving many with little legal recourse and desperate for resolution. Gao Zhuang, one of the victims, has refused to pay his mortgage for months as a protest against the Chinese property developer responsible for endless delays in completing his purchased apartment.

Gao, a 49-year-old laborer from central Henan, invested his savings in a 1.2 million yuan ($170,000) apartment in Zhengzhou in 2019, with the hope of providing his son with a better life and improving his marriage prospects. However, the developer repeatedly announced delays, and construction work came to a halt last year. Like many others, Gao's son's future and dreams are put on hold without a place to call his own.

This wave of mortgage boycotts is a result of cash-strapped developers struggling to complete homes they have already sold in advance, a common practice in China. The real estate sector's chronic issues were exacerbated in 2020 when the government cracked down on excessive borrowing and rampant speculation. The economic slowdown during the pandemic further exacerbated low consumer confidence and a slump in housing demand.

In response to the crisis, the government introduced measures to address the disarray in the sector, but many buyers are still waiting for their homes to be completed. Issues such as shoddy building work, disputes over compensation, and pressure from local officials have surfaced, adding to the chaos.

Both Gao and others have faced difficulties in claiming compensation from developers and have found themselves with limited options for recourse, given the challenges in accessing the legal system. China's leadership has attempted to stabilize the industry by cutting mortgage rates, reducing red tape, and offering more loans to developers. However, analysts warn that the government's room for maneuver is limited, and debt distress is spreading to state-owned developers and larger cities.

The slowdown in China's economy is evident through disappointing June data, such as low retail sales, falling export orders, and slow industrial production. The perception of 'doing business in China becoming riskier' is deterring foreign investment. Additionally, there are concerns about the risk of deflation, which could further harm economic growth and social stability.

Xi Jinping's efforts to rebalance the economy toward domestic consumption have faced challenges, as the lack of expanded social welfare and healthcare provisions has led to high levels of precautionary savings. Consequently, domestic consumption remains weak, and the government's 'Common Prosperity' policy lacks support from structural economic reforms.

The Chinese economy is likely to face an extended period of weak growth due to demographic shifts, decreased capital-intensive growth, and slowing productivity growth. The government's emphasis on state-owned enterprises over the private sector may not revitalize economic growth, as these corporations have lower productivity compared to private firms.

As China's economic challenges persist, all eyes are on an expected Politburo meeting later this month, where top leaders may chart the policy course for the rest of the year. However, finding a solution to the slowing economy will require addressing complex and deeply entrenched issues in the real estate sector and broader economic reforms.