News analysis

Tianjin Eco-City rattled, but not for long

Experts and businesses confident that deadly blasts won't hurt its future development

Home sales and inquiries in Tianjin Eco-City have returned to normal levels since the Aug 12 explosions, said Mr Liew Choon Boon, chief executive of SSTEC Investment and Development.
Home sales and inquiries in Tianjin Eco-City have returned to normal levels since the Aug 12 explosions, said Mr Liew Choon Boon, chief executive of SSTEC Investment and Development.PHOTO: TIANJIN ECO-CITY

Deadly explosions at a chemical warehouse in the northern port city of Tianjin earlier this month left behind a devastated industrial landscape and a murky tale of political malfeasance and corruption at the top.

The blasts, which killed 150 people, have also rattled a joint project between the Singapore and Chinese governments, 16km away.

The Sino-Singapore Tianjin Eco-City (SSTEC) escaped with only superficial damage to its buildings but observers say collateral fallout could be greater, at least in the short term.

Confidence in Tianjin's government and the reputation of the Binhai New Area, where the eco-city is located, have taken a hit amid fears that the air and water near the explosion site are now contaminated.

Some 11 officials and port executives are being investigated for dereliction of duty or abuse of power.

  • Milestones of the SSTEC

  • November 2007: Singapore and China jointly decided to select Tianjin as the location for an eco-city. An agreement was inked between Singapore Prime Minister Lee Hsien Loong and then-Premier Wen Jiabao.

    September 2008: Singapore and China broke ground for the joint project, their second after the Suzhou Industrial Park, aiming to make it a model of sustainable development.

    February 2012: The first batch of residents moved into the Sino-Singapore Tianjin Eco-City (SSTEC).

    September 2012: The first school started classes in the eco-city.

    March 2013: The SSTEC was named the first National Green Development Demonstration Zone by China State Council.

    September 2013: Some 1,000 firms were registered.

    June 2014: The number of residents in the eco-city crossed the 10,000 mark.

    July 2014: Companies in the eco-city can take yuan loans from banks in Singapore, among a range of other cross-border yuan transactions, as both countries stepped up financial cooperation.

    August 2015: The number of residents reached 30,000 with 2,300 companies registered.

Moreover, the city's economy has not been spared. Losses are expected to top US$1.5 billion (S$2.1 billion), with the economic impact likely to be felt for months as massive clean-up efforts continue.

Against this backdrop, the eco-city must continue growing its population, attract investment and sell apartments as a model of sustainable development.

Begun in 2008, it is the second government-to-government flagship project after the Suzhou Industrial Park, which was started in 1994. It is home to some 30,000 residents, although when fully developed the city can accommodate 350,000 people.

"In the short term at least, there might be an impact on the eco-city because whatever affects the wider Tianjin economy has a knock-on effect on the SSTEC," said East Asian Institute analyst Chen Gang.

"There is also a psychological impact as the high-profile explosion has affected the Binhai area's reputation," he told The Straits Times. "Businesses might delay expansion plans and people might put off plans to move into the eco-city till the situation stabilises further."

Already, Tianjin's mayor Huang Xingguo has acknowledged it is unavoidable that some foreign companies might consider relocating, even though Tianjin's disruption is just temporary.

Some expatriates, fearing for their health, are also moving out from the Binhai area, including to Beijing, about an hour away by high-speed train.

But Mr Liew Choon Boon, chief executive officer of SSTEC Investment and Development, the city's master developer, says it's "business as usual".

Home sales and inquiries have returned to normal levels since the Aug 12 blasts, he said. According to data released by Tianjin authorities, the air and water quality in the eco-city is also safe, Mr Liew said.

"We are confident in the prospects and future development of the SSTEC... we will continue to work closely with the Singapore and Chinese governments to build on the good progress the eco-city has made over the past seven years," he added.

Experts say the long-term impact on Tianjin and the SSTEC will hinge on how the authorities handle the situation over the next few weeks.

But it is likely to be more subdued as many accept the blast as a one-off accident.

It could even encourage future home buyers to choose the eco-city over other Binhai areas such as the more developed Tianjin Economic-Technological Development Area (Teda), which is closer to the blast site, some say.

Professor Liu Gang of Tianjin's Nankai University, an adviser on regional growth, told The Straits Times that Tianjin remains an important strategic northern port and is key to the central government's plans to integrate the development of the neighbouring regions of Beijing, Hebei and Tianjin.

"There is definitely reputational damage to Tianjin but if the government can show that it's taking steps to prevent similar accidents and has held people accountable for the mishap, then this will help stabilise expectations and I don't think any impact will last for more than six months," he said.

"This is a random accident; other cities that have had industrial accidents like this in the past have managed to bounce back," Prof Liu said.

Dr Chen noted that the impact on the eco-city will also be "moderate" compared to other parts of Binhai district because it is not involved in the heavy industry sector that could be subject to an overhaul after the deadly blast.

"SSTEC's industries are mostly to do with the sustainability and creative sectors so it is more isolated.

"The long-term impact will depend on the release of the investigation report and the political repercussions as many details are still unclear," he said.

Shenzhen University Sino-Singapore expert Lu Yuanli said there are opportunities even in a crisis. "Singapore is known for running cities well and maybe in the future, the other parts of Binhai can learn from how the eco-city is run so they can be better managed."

Singapore businesses in Tianjin's Binhai area also gave the municipality a vote of confidence.

Mr Bennett Neo, CEO of logistics firm YCH Group, whose warehouse in Teda was damaged, said the blast will push the regulation of dangerous goods in the right direction.

"Indirectly, costs might increase but it's for the best. Tianjin is still a very important city and we will continue to be based there.

"Ultimately, the issue is larger than Tianjin; it's about whether you believe in China or not," he told The Straits Times.

A version of this article appeared in the print edition of The Straits Times on August 31, 2015, with the headline 'News analysis Tianjin Eco-City rattled, but not for long'. Subscribe