Based on the island’s natural geographic location and its adequate transportation infrastructure, successive presidents of Taiwan have tried to position it as an air or sea transit hub, and potentially a military one for the United States and her allies in the region.
One of Taipei’s major policy initiatives has been to turn the island into an air transit hub. This effort is exemplified by the “Aviation City” project for the Taoyuan airport and adjacent areas (桃園航空城). However, the initiative is limited by the technological advancements and the current international environment, which have undermined the importance of Taiwan for the global aviation industry. During the Cold War era, the relatively short ranges of aircraft and the impassable airspace of Communist countries made Taiwan the optimal midway stop between Southeast Asia and Northern America. Now that the current commercial jets can handle non-stop flights between Southeast Asia and the West coast of the North American continent without a problem, Taiwan only provides airspace and related traffic control, and no longer serves as a hub to stop by or transfer. The open air space in China and Russia further presents alternative routes, especially for the newly rising South Asian aviation market.
From the example of several successful Arab airlines forming aviation transit hubs in their home countries, a strong aviation industry can establish an air transit hub regardless of the ranges of aircraft, but Taiwan’s diplomatic isolation, restrictive infrastructure and other conditions deny such an approach. Lack of political recognition impedes settling air routes between Taiwan and other governments, particularly the fifth aviation freedom to extend network. The Taoyuan airport leaves limited capacity for Taiwan’s carriers to transfer passengers and cargo, not to mention frequent disruptions by broken runways, flooding and other accidents. Successful Arab airlines are supported with sufficient investment and cheap fuel, neither of which is available in Taiwan. Finally, an over-emphasis on the cross-Strait flights more or less distracts the Taiwanese aviation industry from a more global focus.
The Taiwan Strait, which encompasses several sea lines of communication (SLOC), presents Taiwan with a great opportunity to serve as a sea transit hub. Yet, this also requires a robust economy to support sufficient trade. Originally, the harbors and facilities for accommodating merchants could be Taiwan’s attraction to international investors as a hub for sea transport, but Chinese counterparts on the same SLOCs now also provide similar or even better infrastructure—in addition to an increasing amount of trade. The Kaohsiung Port was once the third busiest one in the world, but it has been surpassed by a number of Chinese ports, which have significantly expanded and connected to a much larger hinterland with a huge manufacturing industry. In contrast, Taiwan’s shrinking industry and lack of neighbouring hinterland for entrepôt constrain the demand for merchants to stop by.
Militarily, Taiwan was once considered an “unsinkable aircraft carrier” by both Japanese and American strategists. It is still important in the current regional geostrategic picture, but its vulnerability to external attacks and location make it unlikely to be used as a military transit hub. According to the American naval strategist Alfred Thayer Mahan, security is essential for all military bases, and modern military technology considerably threatens most transport facilities in Taiwan. In the face of Beijing’s expanding capability of active defence, also known as anti-access and area denial (A2/AD), in terms of cruise and ballistic missiles as well as following air raids, both naval and airbases in Taiwan could be significantly damaged by pre-emptive strikes. The increasing cross-Strait interaction presents Beijing with more opportunities to carry out unconventional tactics, such as sabotage and cyber-attack. Although Taiwan’s location could be used to counter China’s A2/AD strategy, its vulnerability to attack and the political limitation on US military deployment would outweigh the advantages in the current context.
Taiwan may serve limited value as a strategic transit hub for China. To be sure, militarily controlling Taiwan would be a great asset for the People’s Republic of China (PRC): creating a forward base from which to press Japan and the Philippines through military and legal means. However, Taiwan cannot moderate the PRC’s Malacca dilemma—a strategic chokepoint in Southeast Asia. Furthermore, blocking the Taiwan Strait does not eradicate the SLOCs of Japan and Korea, though it would create an inconvenient detour. Both the location and security would limit Taiwan’s strategic value for China.
What Taiwan Can Improve
To be a transit hub reflects a country’s overall conditions and circumstances more than specific policies. Although it is difficult for Taiwan to directly transform into a strategic transit hub, there are some policies that could strengthen its relevance to the world, an important element in all hubs.
As transport is driven by economy, Taiwan’s macroeconomy and external ties determine the transport links with other countries. Despite large losses of manufacturing industries to China and other newly rising economies, Taiwan could retain and develop certain industries that are crucial to global production chains and markets. The current concentration of economic ties with China, about 40 percent of Taiwan’s exports, in addition to three million Taiwanese living in China, results in most Taiwanese transport companies, both air and sea, focusing mainly on the cross-Strait routes. This trend obviously militates against a transit hub, because it would occupy assets, manpower, and attention that could be applied to other routes. Furthermore, Taiwan is unlikely to be a major transit hub for Chinese passengers and cargo due to China’s expanding air and sea transport companies. The administration’s newly-inaugurated New Southbound policy would alleviate the over-concentration but will take time. In the shadow of Chinese mega seaports and airports, a balanced distribution of economic ties would not immediately make Taiwan another Singapore, but more relevance to regional and global economies is fundamental to becoming an indispensable transit hub.
As for military matters, Taipei can effectively moderate the A2/AD threats. Since the People’s Liberation Army’s missiles are all armed with limited-size conventional warheads, fortification would be effective to absorb the first salvos. Furthermore, considerable second-strike capability to neutralise further attacks would be necessary to adjust the unfavorable balance of forces across the Strait through more deterrence. Of course, a robust command chain, both physically and psychologically, is critical and related to internal security. Although it is impossible for Taiwan to return to the state of total isolation from China, like during the Cold War, it is essential that Taiwan enhance its counter-intelligence capabilities.
Only a secure Taiwan will have geostrategic value.
The main point: Despite its location, Taiwan is unlikely to be a strategic transit hub, but it can bolster its relevance for the world, in order to increase its strategic value in the regional balance of power.
 Fifth aviation freedom refers to an airline’s freedom to operate flights between two foreign airports. Usually, airlines can only operate between a domestic and a foreign airport. Therefore, the fifth aviation freedom is a specific arrangement. https://www.icao.int/Pages/freedomsAir.aspx
 James R. Holmes, “Strategic Features of the Indian Ocean Region,” in Joachim Krause and Sebastian Bruns (eds.) Routledge Handbook of Naval Strategy and Security (London: Routlege, 2016), 81.