The Ten Major Construction Projects: A NT$200 Billion Gamble Backed by US$1 Billion in Foreign Reserves

30-Second Overview:
The Ten Major Construction Projects were a series of large-scale infrastructure initiatives undertaken by Taiwan in the 1970s, spanning transportation, heavy industry, and energy.
Taiwan was then caught between diplomatic setbacks and the oil crisis. Under the slogan “If we do not act today, we will regret it tomorrow,”
the government committed funds equivalent to roughly eight times the country’s foreign exchange reserves at the time. This gamble laid the foundation for Taiwan’s industrial upgrading,
but its highly concentrated state-capital monopoly and disregard for environmental costs also left decades of controversy and social consequences.

“If we do not act today, we will regret it tomorrow.”¹ When Premier Chiang Ching-kuo uttered these famous words before the Legislative Yuan in November 1973, Taiwan was at one of the bleakest moments in its history.

That year, the first oil crisis erupted, plunging the global economy into recession, while Taiwan’s inflation rate soared to 47.5% ². Worse still, Taiwan had withdrawn from the United Nations just two years earlier, and the shadow of diplomatic isolation hung over the entire country. Against this backdrop, the government announced a program whose total cost would run into the hundreds of billions of New Taiwan dollars. Final expenditure reached approximately NT$209.4 billion ³. At the time, Taiwan held only about US$1 billion in foreign exchange reserves ⁴. It was a high-stakes gamble on the country’s future.

Origins: A “Defense of Domestic Demand” Forced by Crisis

The Ten Major Construction Projects arose less from long-term planning amid fiscal abundance than as an emergency response to immediate crises. After US aid ended in 1965 ⁵, Taiwan’s economy took off, but its infrastructure gradually approached the limits of its capacity. The main north–south railway was still single-track, road transport depended on narrow provincial highways, and congested ports and insufficient electricity had become bottlenecks to further development ⁶.

📝 Curator’s note: The central logic of the Ten Major Construction Projects was to generate domestic demand through large-scale public investment, thereby countering recessionary pressure caused by external economic turmoil.

The ten projects comprised:

1. Transportation (six projects): the Sun Yat-sen Freeway (North–South Freeway), railway electrification, the North-Link Railway, Chiang Kai-shek International Airport (now Taiwan Taoyuan International Airport), the Port of Taichung, and the Port of Su’ao.
2. Heavy industry (three projects): China Steel Corporation (the integrated steel mill), China Shipbuilding Corporation (the large shipyard), and the petrochemical industry (the petrochemical industrial complex).
3. Energy (one project): the First Nuclear Power Plant.

Controversy: An Original Miracle or the Reaping of a Japanese Colonial Legacy?

In official narratives, the Ten Major Construction Projects have often been portrayed as the product of Chiang Ching-kuo’s foresight and that of technocrats such as Sun Yun-suan and K. T. Li ⁷. Historical details, however, show that blueprints for some of the projects had already begun to take shape during Japanese colonial rule.

The clearest example is the railway system. The development of Taiwan’s railways from steam to diesel and then electrification in fact continued plans Japan had been unable to complete in the 1930s because of the war. In the 1960s, the Taiwan Railways Administration also used US aid to renew its rolling stock and promote dieselization, effectively completing unfinished work from the earlier period ⁸. In other words, the Kuomintang government did not “invent” these projects from scratch. It largely reactivated technical foundations laid under Japanese colonial rule within a Cold War context. Some commentators have also argued that Sun Yun-suan’s celebrated restoration of approximately 80% of Taiwan’s power supply within five months after the war rested partly on the technical foundations left by Japanese engineers and the efforts of local Taiwanese engineers ⁹.

The Black Box Behind the Decision: K. T. Li “Knew Nothing”

Although he was later regarded as a hero of Taiwan’s economic development, then finance minister K. T. Li had no prior knowledge of the Ten Major Construction Projects when Chiang Ching-kuo announced them. Many other financial and economic officials were likewise kept in the dark ¹⁰. This indicates that the projects were the product of highly centralized decision-making. Li later described public works on this scale as “grandiose” and “ostentatious,” and felt immense pressure when raising the necessary funds ¹¹.

To cover the enormous costs, Li subsequently did his utmost to secure financing, including borrowing from Saudi Arabia ¹². The program’s budget was approximately 2.5 times the central government’s annual expenditure at the time ¹³. Had subsequent economic growth not materialized, the gamble could easily have become a fiscal disaster.

A Changing Landscape: From the “Expressway to Heaven” to the National Freeway

Before construction began on the Sun Yat-sen Freeway, Taiwan’s first expressway was the US-aid-supported MacArthur Highway ¹⁴. The highway was narrow and lacked a median, however, and vehicles passing one another at 100 kilometers per hour earned it the derisive nickname “Expressway to Heaven” ¹⁵.

Construction of the Sun Yat-sen Freeway officially began in 1971. The project served not only transportation needs but also military purposes. Its emergency runway sections were designed to allow military aircraft to take off and land if airfields were destroyed during wartime ¹⁶, while its road cuttings were intended to function as delaying defenses in the event of an enemy landing ¹⁷. This shift toward a highway-centered development model was also closely connected to efforts to foster Taiwan’s domestic automobile industry, including Yulon Motor ¹⁸.

Impact: A Structural Shift from Light to Heavy Industry

After the Ten Major Construction Projects were completed, Taiwan’s economic structure underwent a fundamental transformation. Steel supplied by China Steel, massive vessels built by China Shipbuilding, and raw materials produced by the petrochemical complex helped Taiwan evolve from an economy centered on contract manufacturing and assembly into one with a foundation in heavy and chemical industries ¹⁹.

• Economic data: During the construction period, Taiwan’s economic growth rate rebounded to approximately 13.5% in 1976, setting a record high at the time ²⁰.
• Social transformation: The opening of the Sun Yat-sen Freeway made it possible to envision all of Taiwan as a “one-day living circle” and narrowed the urban–rural divide ²¹.
• Railway transformation: The opening of the North-Link Railway connected eastern and western Taiwan. Although originally expected to lose money, the route unexpectedly became the Taiwan Railways Administration’s most profitable line ²².

Challenges: The Shadow Behind the Infrastructure Miracle

The Ten Major Construction Projects also produced far-reaching adverse effects. Critics have noted that the expansion of heavy and chemical industries imposed substantial environmental costs and came at the expense of working-class laborers ²³. Commentators have also argued that party-state enterprises such as the Veterans Engineering Agency under the Veterans Affairs Council monopolized public works contracts through single-source negotiations, crowding out competition from private construction companies ²⁴.

Environmental pollution remains among the most controversial consequences. Critics contend that the environmental debt generated by the petrochemical and heavy industries was shifted onto the public for decades ²⁵. Economist Ma Kai has likewise reflected that this model of “governing through engineering projects” entrenched a tendency among later governments to respond to economic downturns by spending lavishly on infrastructure ²⁶.

Conclusion: The Projects Left More Than Infrastructure

The Ten Major Construction Projects were not only the skeleton of Taiwan’s economic miracle, but also a mirror. They reflected the survival anxiety Taiwanese people experienced in the face of isolation, while demonstrating how technocrats pursued development within the constraints of authoritarian rule. As people enjoy the convenience of freeways and airports today, they should not forget that these facilities emerged from an era when Taiwan held only US$1 billion in foreign exchange reserves—a gamble in which everything was at stake.

Perhaps the most precious legacy these projects left Taiwan is not the ports or factories themselves, but the collective memory of “daring to make the hardest decisions when we were at our poorest.”

Further Reading

• Freeways — The Sun Yat-sen Freeway was only the first of the Ten Major Construction Projects. This article examines the fifty-year history of power and social costs connecting it with the MacArthur Highway, the Hsuehshan Tunnel, and National Freeway No. 7.

References