Foundations of financial folly

Poor urban planning

The report, which was sent to the Ministry of Housing and Urban-Rural Development, also noted that 46 percent of the buildings were demolished for reasons of commercial interest, or because of poor urban planning or bad management. In addition, 7 percent of them were razed because they were local government vanity projects that had limited public functions.

"In total, 90 percent of early demolitions were unreasonable," said Yin Bo, a professor at the academy and one of the authors of the report. He added that just 10 percent of the buildings were demolished because of poor build quality or because they violated construction laws and regulations.

Yin suggested that local governments should improve their planning procedures and adopt a scientific, far-sighted approach to ensure that construction projects aren't abandoned when the leaders of local governments move on or are replaced.

In the light of the large number of demolitions, in 2013 the State Council issued a regulation forbidding the random razing of buildings that are still within their designed service lives, with the exception of those that have to be replaced in the public interest.

The problem is that the line between public and private interests is blurred, and it's difficult to determine which projects serve which interest, said Li Xiaoping, who also worked on the academy's report.

According to Yin, local governments should have specific powers to regulate demolitions and review procedure standards should be higher and less flexible. In addition, governments need to charge more for demolition projects "to prevent the violation of people's interests".

Back in Guangzhou, when Liu filed a complaint with the city authorities about the ongoing demolition and construction work and the effect on her business, the government responded by advising her to contact the subway company to demand a full explanation and compensation for her losses.

At present, the matter is unresolved, but Liu is determined to push for restitution. "I'll continue to pursue this matter until I get fair treatment," she said.

Contact the writers at zhengjinran@chinadaily.com.cn and xujingxi@chinadaily.com.cn

Liu Ce in Shenyang, Liaoning province contributed to this story