“The key to this issue is to complete unfinished projects because this will at least keep some of the financing flowing,” said Steven Cochrane of economics research firm Moody’s Analytics.

He added that many homes are pre-sold but if construction stops, buyers no longer make mortgage payments, which puts more strain on developers’ finances.

Earlier this month, Beijing said that China’s economy had slipped into deflation as consumer prices declined in July for the first time in more than two years.

Weak growth means China is not facing the rising prices that have rattled many other countries and prompted central bankers elsewhere to sharply increase borrowing costs.

The country’s imports and exports also fell sharply last month as weaker global demand threatened the recovery prospects of the world’s second-largest economy.

Earlier this week, China’s central bank unexpectedly cut key interest rates for the second time in three months, in a bid to boost the economy.