China’s Dalian set for world’s largest offshore airport as Beijing tries to revive moribund northeast
- Dalian city in China’s northeast rust belt is building a new 21 sq km (8.1 square miles) airport on reclaimed land off the coast, nearly double the size of Hong Kong’s
- Despite the devastating impact the coronavirus pandemic has had on the global travel industry, China plans to add more than 30 airports nationwide by 2025
While China is slowing its infrastructure spending amid concerns of growing debt, it is still pushing ahead with investment to support its aviation ambitions, including construction of the world’s largest offshore airport outside the northern port city of Dalian.
Despite the devastating impact the coronavirus pandemic has had on the global travel industry, China is building more airports. It will add more than 30 nationwide by 2025, boosting national passenger capacity to 2 billion, according to the Civil Aviation Administration Commission (CAAC).
“They didn’t give up on building a new airport in Dalian, but it doesn’t mean it will have the [traffic] volumes,” said Dr James Wang, research director at the Belt and Road Hong Kong Centre and an expert in transport and logistics. ‘This is a chicken and egg situation [for Dalian].”
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Dalian Jinzhouwan International Airport, located in the northeastern province of Liaoning, will be 2.7 times bigger than the existing airport and have capacity for 43 million passengers a year.
It will be built on 21 sq km (8.1 square miles) of reclaimed land off the coast, nearly double the size of the Hong Kong International Airport, much of which was also built on reclaimed land.
Dalian’s government confirmed last month construction would begin this year, after China’s cabinet, the State Council, listed the airport as an infrastructure priority in 2009 to boost provincial economic growth.
In its heyday, Dalian was a front runner in attracting foreign investment and international trade. It was a go-to investment destination for Japanese and South Korean electronics manufacturers, including Hitachi, when China began opening up its economy from the late 1970s onwards.
However, amid growing competition with other Chinese cities, it watched as foreign exporters left because of growing costs, a shortage of labour and geopolitical risk.
Dalian’s gross domestic product (GDP) growth rate declined from 13.86 per cent in 2012 to 6.5 per cent in 2019, and was just 0.41 per cent last year, when China’s economy was ravaged by the coronavirus pandemic.
The fate of the city’s aviation industry has not fared much better. Dalian’s existing airport fell out of the top 20 in China in terms of passenger and cargo volumes in 2013. In 2020, it was ranked at 40 behind another northeastern airport in Harbin province.
Last year, it saw 8.6 million passengers pass through its gates, down 57.2 per cent from 2019. Cargo volume also dropped 29.1 per cent from 2019 to 122,951 metric tonnes in 2020.
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Despite the risk of poor returns and hefty debt, many Chinese cities see building airports and high-speed railways as a strategy to move up the value chain from mass manufacturing to advanced technology production and more employment in the service sector.
“Talent in international trade, business, finance, education, scientific research and development are accustomed to travelling by air,” said Guo Yufeng, chief executive of WinSale Airport and Q&A Consulting.
“So airport infrastructure is the foundation of that, supporting business travel. For many cities, it’s a must-have.”
But in reality such planning may not work for all cities, particularly those that are not in good financial position.
Because of the economic growth problems in the northeastern region, it isn’t pressing for Dalian to have another airport
“Because of the economic growth problems in the northeastern region, it isn’t pressing for Dalian to have another airport,” Wang said. “Airports may not be able to lift overall regional growth.”
On Thursday, China’s top state planning agency also gave the green light for Xiamen, a port city in the southeast, to add another airport. The National Development and Reform Commission said it would lift the standard of the transport in the west coast of the Taiwan Strait, boost economic growth in the region and strengthen Xiamen’s place in the Belt and Road Initiative.
Xiamen is better positioned to build a second airport, because it can help boost trade with Taiwan and increase connections throughout Fujian province, Wang said.
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Xiamen’s airport has consistently been ranked in China’s top twenty, seeing 16.7 million passengers last year, down 39 per cent from 2019. It handled 278.336 metric tonnes of cargo last year, down 15.8 per cent from 2019.
However, its GDP growth has slowly declined from double digits to 5.7 per cent last year.
Authorities aim to have both new airports in Dalian and Xiamen completed by 2025. Xiamen’s new airport has a 53.69 billion yuan (US$8.3 billion) price tag, but the total cost in Dalian is not clear.
In a 2014 interview with the state-backed China Daily, Bai Guangyuan, deputy commander in charge of the airport’s construction, said the reclamation project alone would cost 16.49 billion yuan.
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In 2015, the Dalian government said the total cost of the project would be around 26.3 billion yuan, though total investment is likely to be much higher now.
With a growing number of Chinese cities competing for shares in air travel and cargo traffic, Dalian will need more than an airport to boost its economy.
Cities such as Zhengzhou, home to Foxconn, the maker of Apple’s iPhones, are already subsidizing flights to become a cargo hub, said Wang.
“If you are poor, it is heavy on your budget. It can be very risky,” he said.
