Beijing authorities are trying to find a legislator who was building a basement illegally under his courtyard, causing a street surface to collapse in Xicheng district.
The collapse happened early on Saturday morning when five workers were attempting to dig a basement under the courtyard on Deshengmennei Street.
The cave-in resulted in a pit 15 meters long, 5 meters wide and 10 meters deep, according to the Beijing Information Office.
Traffic on the street was disrupted and subsidence was caused to at least four other rooms in properties owned by people north of the site. No deaths or injuries were reported.
A resident who lives nearby, but who declined to give his name to China Daily, said, "This place is too close to Xihai Lake, so there is too much water in the ground to support such a large construction."
Li Baojun, who owns the house where the incident happened, is a People's Congress deputy for Xuzhou in Jiangsu province and president of Haiying Group, a corporation in Jiangsu whose main business is auto parts production.
The 190-square-meter courtyard, which includes five rooms, was bought by Li in April 2010. Since two of the rooms are under a historical and cultural protection programme, any restoration or reconstruction work has to be approved by district authorities.
On Wednesday, the Beijing Planning Commission said Li had applied to renovate the courtyard.
But the permit that the commission granted only allowed him to renovate the courtyard, not to dig a basement.
Li Yunzhi, who lives across the street, said residents had long complained to government departments about illegal construction work at the site, but had received no reply.
Beijing Youth Daily reported that city authorities had warned Li and ordered him to stop work after residents complained in July.
Tang Jinchao, a general manager at Haiying Group, who has arrived in Beijing to handle Li's affairs, told China News Service that Li paid 3.8 million yuan (S$822,881) to a construction company in Shandong province.
He told the company to handle all matters relating to the basement construction, including obtaining permission from government departments.
By Wednesday, the hole had been filled in, traffic flow had returned to normal and the site was under guard.
The authorities have provided accommodation for 15 people whose homes were affected by the collapse.
Beijing Youth Daily said authorities in Beijing will report Li's illegal behaviour to government departments in Xuzhou. China Daily could not reach Li for comment.
Liu Zhongda, director of the Xuzhou People's Congress Standing Committee, said it will await the Beijing investigation results before taking any action.
Liu, who confirmed that Li attended the annual meeting of the local people's congress several days ago, added: "We haven't received any requests from Beijing to cooperate with the investigation. We will handle the investigation result seriously when we get it."
Cang Wei and Xie Tian contributed to this story.