By Nikkei Asia, Valor — ShanghaiA group of suppliers to developer China Evergrande is threatening to stop paying its bank loans to protest Evergrande's unpaid bills, an additional problem to the mortgage payment boycott promoted by homebuyers.China has seen a wave of debt defaults among real estate developers, including Evergrande, which is saddled with about $300 billion in liabilities.These huge debts and financing problems have led to dozens of unfinished housing projects, sometimes for years, sparking widespread anger among homebuyers, who are typically required to pay the full cost of their homes upfront.Late last month, buyers of hundreds of unfinished projects across the country took to social media to warn that they would default on mortgages until their homes were completed, raising fears of a meltdown among banks that lent money to builders.The crisis prompted regulators to pledge to speed up completion of unfinished homes as Chinese censors scrambled to weed out mentions of the boycott on social media.Now, a group of Evergrande suppliers in the central province of Hubei has circulated a warning on social media to demand that the builder pay back what it owes these suppliers, or they would stop honoring loans they made to regional banks."We have decided to stop repaying all loans and arrears and advise our peers to decline any request for payment on credit," the July 15 statement said.“And Evergrande must bear the subsequent chain reaction of supply chain risk (disruptions) due to these actions.”The letter also claimed that about 6 billion yuan ($886 million) of funds in an escrow account were misused by Evergrande, resulting in stalled projects and missed payments to suppliers.It was unclear how many suppliers were behind the move, but Hubei-based paint maker Badeshi was among the companies billing Evergrande."Since last August, we have only dealt with Evergrande in cash because they owe us tens of millions of yuan," an official told Nikkei Asia.Evergrande, which has promised to unveil a restructuring plan this month, did not respond to questions about threats from suppliers.The troubled company has a vast network of suppliers across the country for its projects, and some have recorded huge losses from unpaid bills owed by what was once China's biggest real estate developer.The company faces a wave of lawsuits from creditors and suppliers.This week, officials in Henan province - where some homeowners are joining the boycott of mortgage payments - said they would set up a rescue fund to help financially troubled homebuilders.While many developments are outside China's wealthiest cities, even the financial capital Shanghai has been affected by a series of construction shutdowns that threaten to weigh on a nascent recovery in China's real estate sector."Construction workers did not return after the Lunar New Year holiday in February and indoor activities simply stopped in March," said He Meng, a real estate agent who has sold apartments in the Royals Garden, a luxury skyscraper of more than 600. units on the outskirts of Shanghai.Bank ANZ estimated that 1.5 trillion yuan in mortgage loans could be affected by the mortgage boycott, while bank Nomura said developers delivered only about 60% of homes they sold between 2013 and 2020.Many of the country's banks said their exposure to the unfinished projects was limited.But the possibility of more homeowners and suppliers joining the loan boycott was still a serious risk, according to Citi Research."Things could deteriorate dramatically if more homebuyers join the suspension or if vendors and contractors also stop their debt payments," it warned in a report on Tuesday.