Before its shares resumed trading on Jan. 4, China Evergrande Group said that the Danzhou City authorities had ordered it to get rid of all the 39 residential buildings it built on artificial Haihua Island—the world’s largest flower-shaped artificial tourist island, according to The Epoch Times.
Evergrande was ordered to repair and halt construction because of damage it caused to the maritime ecological environment. However, Evergrande proceeded with the construction, with the Danzhou government condoning it.
The Danzhou City Administrative Law Enforcement Bureau ruled that Evergrande’s 39 buildings with a total construction area of 4.68 million sq. ft. on the island have had their planning permits revoked because they violated Article 40 of the Law on Urban and Rural Planning.
However, the fate of these 39 buildings was decided in 2020 when China’s Ministry of Ecology and Environment issued a notice calling for the construction projects within the sea area of Haihua Island to be suspended and resumed after environmental corrections are completed.
Evergrande Haihua Company has never fulfilled the relevant requirements. Before the notice, in July 2019, the company erected four bridges and culverts in violation of regulations. The illegal encroachment area is about 4000 square feet.
The department claimed that “Although Danzhou City imposed penalties for illegal activities such as construction without approval from August 2017 to June 2018, they allowed the company to continue the construction.”
Before Haihua Island, Evergrande had used the land to build tourism infrastructure. Hainan province had asked Danzhou city to adjust and optimize the construction planning.
But by the time of inspection, the planning adjustment had not yet been approved by the city. As a result, the company continued to build 39 residential buildings on Haihua Island in 2018, while the Danzhou City Department of Environment and Ecology completed its EIA procedures.
Danzhou city waited until Oct. 30, 2020, to issue the “Master Plan for the Repair of Sewer Bridges on Haihua Island,” which stated that four sewer bridges be demolished.
On Dec. 3, 2020, Zhang Qi, a former member of the Standing Committee of the Hainan Provincial Party Committee of the Chinese Communist Party and former Secretary of the Haikou Municipal Party Committee, was sentenced to life in prison over corruption charges, with all personal property confiscated at the Guangzhou Intermediate Court.
It was discovered that Zhang Qi had illegally helped relevant individuals and entities during his time in office. For example, he assisted in land development matters, contracting, and project promotion while accepting bribes totaling more than $17 million.
The Ministry of Ecology and Environment announced another correction notice to the Hainan provincial authority on Nov. 23, 2021. As a result, the 3rd and 4th culvert bridges of the Henghai Huadao project have been dismantled, and other demolition work is in progress.
Haihua Island approved despite violation of regulations
Haihua Island is the passionate work of Xu Jiayin, the founder of Evergrande. The company’s advertising materials said that Xu created the prototype of the artificial island.
Xu once visited Danzhou city by private plane and told its officials that he was aspiring to stay in Danzhou for the rest of his life.
According to the official website of Haihua Island, the island is described as a “cultural tourism destination that people all over the world desire.” Evergrande took 12 years to build and spent hundreds of billions of dollars installing many entertainment facilities.
The island complex has been recognized as the world’s largest artificial island, composed of three independent islands, namely Islands 1, 2, and 3. Island 1 is mainly for the public, with commercial buildings such as hotels, resorts, entertainment, and commercial streets, while Islands 2 and 3 are primarily residential.
Oriental Outlook weekly reported in August 2013 that Haihua Island is the No. 1 project of the Hainan Provincial Government to develop tourism in West Hainan during the “12th Five-Year Plan” period. The person in charge of supervising the project was Lin Dong, the then-mayor of Danzhou city.
The report cited Dai Wenda, director of Danzhou City’s Department of Oceans and Fisheries, as saying, “As a critical project in Hainan province, the procedures for using the marine area (Haihua island) were approved at the national level, and there were no problems with the systems.”
However, the Danzhou City Government and the maritime authority had to separate the approvals due to regulatory violations. As a result, the renovation project was divided into 36 sub-projects with less than 67 acres and approved 18 sub-projects on Jan. 21, 2013. Another 18 sub-projects were approved on May 4, 2013.
From illegal activity to the demolition of 39 buildings
Since Evergrande made a famous appearance on CCTV with more than 30 press and Internet media in November 2015, Chinese media had become accustomed to news about Evergrande’s illegal island-building—how it turned the crisis into peace—and continued to have projects built on the islands.
The illegal activity of Haihua Island began in its reclamation stages. China’s “Caixin Weekly” in 2017 revealed that the Evergrande Group had begun reclamation work even before it was allowed to use the sea area.
China’s State Oceanic Administration granted several certificates for sea area usage on March 25, 2013, and Aug. 30, 2013. Still, many locals said the rocking and reclamation of the Haihua Island project already began in early 2012. This coincides with the construction start time announced in Tianjin CCCC Waterway Administration Co., the first company to enter Haihua Island.
In the 13th Five-Year Plan (2016–2020) of the Communist Party of China, Haihua Island remains a crucial project promoted by the Hainan provincial government. However, the reclaimed 1,935-acre island has damaged the marine ecological environment, leading to the destruction of a large area of coral reefs and white butterfly shells.
In 2017, the Central Environmental Protection Monitoring Group of the CCP Central Committee described Evergrande’s Haihua Island as “a pocket of money that inflates and destroys the ecosystem.” At the same time, it asked Hainan province for ecological rehabilitation and restoration for the damage caused, but Evergrande proceeded with its construction. The fine amounted to about $34.4 million.
Explaining why Evergrande has now switched its attitude to complying with the demolition guidelines, Li Yuanhua—a former associate professor at the School of Educational Sciences at Capital Normal University, said on Jan. 6 that Haihua Island is a prime example of the corruptive coordination between government and business owners. The project’s initial approval shows that some administrative agencies turned a blind eye. Evergrande’s violations are only addressed now that the CCP is going through the power struggle, which has lost Evergrande its political backers.
Li believes that Evergrande was not part of President Xi Jinping’s side when founded. Nonetheless, Li referred to the latest demolition order that the real estate giant received as rude.
He derided the CCP’s ruthless officials for persecuting Evergrande now because the company can no longer offer them any benefits.