Fast Market Research recommends "Taiwan Defence & Security Report Q2 2014" from Business Monitor International, now available

Boston, MA -- (ReleaseWire) -- 05/02/2014 --The growing assertiveness of Beijing and its military continue to represent the greatest threat to Taiwan's defence and security. Beijing's increasingly militaristic mindset, demonstrated by a ramping up of defence spending for 2014 as well as territorial assertiveness in the East and South China Seas is in stark contrast to the policies the Taiwanese government are pursuing. It will be interesting to see what this means for the cross-strait relationship. On the one hand, Taiwan's decision to scale back its armed forces in combination with a significant decline in defence imports may point to closer integration with China. Indeed, in Q114 China and Taiwan held the first government-to-government talks in 65 years, a highly symbolic development that opens up the possibility for some form of rapprochement. On the other hand, these cutbacks may signify Taiwan's increased reliance on the US, as a counterbalance to China, for its defence and security. Taiwan's various existing defence and security ties with the US reinforce the predominance of this relationship for Taipei.

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Indeed, Taiwan continues to be extremely dependent on the US for the procurement of its defence equipment. A current priority for the Taiwanese military is the upgrade of its existing fleet of F-16 fighter jets. Taiwan is reportedly hitching its F-16 upgrades to the Combat Avionics Programmed Extension Suite programme, to be integrated by US defence manufacturer Lockheed Martin. These costly upgrades, as well as a potentially limited procurement of F-35 fighter jets, are currently monopolising funds for defence equipment. Other procurement priorities include diesel-electric submarines as well as an early-warning and missile-defence system that would enable the island to withstand any Chinese assault until US intervention could occur.

Despite these substantial investments, the value of Taiwan's total defence imports fell in 2013. Part of the reason for this is no doubt the capacity of domestic defence manufacturers to meet the needs of Taiwan's armed forces. For instance, in Q114 the Taiwanese Air Force unveiled locally developed air-to-ground stand-off weapons developed for the nation's F-CK-1 Indigenous Defense Fighter. This weapon, known as the 'wan chien' or 'ten thousand swords' was developed by military-run Chung Shan Institute of Science and Technology. It is designed to be able to penetrate targets in China and will be produced starting in 2015.

Despite the growing aptitude of domestic manufacturers in producing high-tech equipment, BMI sees an increasing asymmetry in the military capabilities of Taiwan and China. In March 2014, Chinese President Xi Jinping announced that Beijing would increase its defence budget by 12.2% in 2014. By 2015, China's military spending will outweigh the combined military spending of Britain, France and Germany.

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