I’m not tuned-in to how new construction is done in China, but I can say why this would never happen in Minnesota. Clients are on a time-line. They would not proceed with a purchase agreement until a somewhat (within 30 days or less) firm closing and occupancy date was clearly possible. The project would have to be far enough through the city approval process to be assured of no delays. With the hint of a builder’s lack of ability to retain tradespeople, buyers will shift to a builder that has deep enough pockets to hang onto good workers.
In a very hot market, buyers will put down money to hold lots or condo units pre-construction. This dollar amount is a small fraction of the total cost of the unit. If the developer went bust, those funds could be at risk. Only in the relatively small number of custom built single-family homes do clients risk a construction loan, where the builder receives disbursements from the bank over the six month period it takes to build a home. But the timing would never put the buyer on the hook for the full amount of the mortgage.