Longyuan Construction Group, a cornerstone of the private infrastructure sector in Zhejiang, has joined the growing list of Chinese builders struggling to maintain liquidity in a cooling economy. The company revealed this week that it has failed to repay 1.1 billion yuan (approximately $152 million) in debt, a figure representing more than 10% of its net assets. This default marks a significant downturn for a firm once seen as a regional leader in civil engineering and public-private partnerships.
The liquidity crunch has already triggered a cascade of legal consequences, with various bank accounts holding approximately 89 million yuan currently frozen by judicial orders. These freezes stem primarily from lawsuits filed by disgruntled subcontractors and suppliers who have seen their payments delayed as Longyuan’s own cash flow dries up. The company admitted that the inability to collect receivables as expected has left it unable to meet its immediate financial obligations to its partners.
This financial distress is reflected in the company’s bleak earnings forecast for the 2025 fiscal year, with projected losses estimated between 1 billion and 1.5 billion yuan. Longyuan attributes this performance to a precipitous drop in new orders and the high cost of maintaining debt in a high-risk environment. The struggle highlights the persistent "triangle debt" problem currently afflicting China’s construction ecosystem, where builders are squeezed between cash-strapped developers and impatient suppliers.
In response to the escalating crisis, the Shanghai Stock Exchange has issued a regulatory letter to Longyuan’s management and controlling shareholders. As a major private player in an industry increasingly dominated by state-owned giants, the firm’s plight underscores the precarious position of private capital in China's current infrastructure landscape. Without a significant recovery in project collection or a debt restructuring plan, the company faces a difficult path toward regaining its previous market standing.