Fast links to mainland speed growth of central Taiwan's hub city
Closer economic ties have helped central Taiwan's biggest city grow at 9pc a year, fuelling a construction boom and sprawling transport systems
The economy of central Taiwan's biggest city, Taichung, is growing about 9 per cent a year on three legs: closer links with the mainland, new transport systems to strengthen those links, and a massive speculative construction boom.
The city has seen its investors return from the mainland because they can now cross the Taiwan Strait more easily, with the airport offering 30-minute check-ins for 70-minute flights to the other side. A ring road that opened earlier this year helps smooth trips to the airport and a fast lane for public buses due to open on July 1 should improve things further. Sea cargo can reach the other side in 3-1/2 hours.
Now foreign investors inspired by mainland-Taiwan trade liberalisation and fast logistics want to spend a combined NT$100 billion (HK$25.8 billion) on plants that will assemble cars in Taichung for shipment to the mainland, Mayor Jason Hu Chi-chiang said in an interview. "With good transportation you have good prosperity," said Hu. "Taichung is a very complete city."
Investors come from [all over] Taiwan to speculate on land prices rising
Taichung is a case study of what the Taiwanese government wants from its sometimes controversial engagement with the US$9.4 trillion mainland economy. Beijing has claimed sovereignty over the self-ruled island since the 1940s, but in 2008 Taiwanese President Ma Ying-jeou set aside that dispute to pursue deals that would boost the island's economy. Some Taiwanese fear Beijing aims to use the new trade deals to seize political control.
Two-way agreements have covered the start of regular direct flights and a trade liberalisation framework deal in 2010. Related pacts aimed at liberalising trade in goods and services face opposition from some Taiwanese but are expected to pass eventually. "In the next few years [the service trade agreement] will be signed [then] the goods trade agreement. That will help Taichung's economy for sure," Hu said.
Local resident Hans Tsai, 36, flies once every two months to Guangzhou to manage the family shoe factory. His father once had to live in Guangzhou to manage it but because of today's transport links the younger generation can live at home and fly back to the mainland periodically.
"Living in Guangzhou? I like it here. It's more comfortable and my family is here," Tsai said while waiting for a flight late last month. "Flights are increasingly frequent and destinations will become more numerous.
"In Taichung, the pace of life is casual. Our fathers, the first wave of Taiwanese business people, are coming back from the mainland now, and the second generation doesn't need to live over there," he said.
Flying from Taiwan's main international airport, near Taipei, would add about 2-1/2 hours to the trip, though tickets would cost 30 per cent less, Tsai said.
Taichung's airport was expected to receive a million passengers from outside Taiwan this year, up from 3,500 six years ago and 290,000 last year.
The short travel time for sea freight means Taichung is close enough to get fruit grown high in the mountains to mainland markets within a day.
The rebasing of Taiwanese investors, the transit links and the city's central location have helped set off a building boom.
"It's the place that real estate developers like the most," Hu said. "They have faith in Taichung. The development is just so fast."
Taichung's economy grew 45 per cent from 2007 to 2012, with its gross domestic product totalling NT$960 billion.
A square-kilometre tract of the city centre that locals call Phase 7 may be the most emblematic. It is along the city's main east-west axis, linking the railway station to the airport. Cranes and drab scaffolding nets alternate in chequerboard fashion with gaudy, freshly built housing complexes, some more than 20 storeys high. A park, a theatre, a high-rise mall and two five-star hotels under construction sit among the new towers, which are flanked by the first of the city's planned six bus rapid-transit lanes.
"Investors come from north, south and central Taiwan to speculate on land prices rising because of the district's location," said Lee Shao-ting, an agent with Yungching Real Estate. She anticipates that parts of Taichung will eventually look like central Hong Kong. Her office is selling 200 units in Phase 7.
