In diplomatic impasse, Taiwan looks to homegrown weapons

By Ralph Jennings Sep 20, 2011, 4:39 GMT

Taipei - Business is booming at Taiwan's state-owned defence manufacturers, as the country increasingly looks to its own resources to keep pace with China's military expansion.

Aerospace Industrial Development Corp (AIDC) expects to produce 71 fighter planes over the next two years, as negotiations with the United States for updated fighter jets appear to have stalled.

Taiwan's traditional arms supplier has not agreed any new sales for more than a year, and analysts say Washington will probably reject the five-year-old request for 66 new F-16 fighter jets.

US officials are wary of provoking China, as happened when they agreed a 6.4-billion-US-dollar defence package to Taiwan in January 2010.

No other country has ever sold weapons to Taiwan, considered a breakaway province by Beijing since the civil war of the 1940s, when the Nationalists lost to Mao Zedong's Communists and fled to the island.

Despite warming ties, Beijing has about 1,900 missiles aimed at Taiwan just 160 kilometres away, according to the island's defence officials. Beijing's declared annual military budget is 91.5 billion dollars, about 10 times more than Taiwan's.

Taiwan research institutions are working on alternatives to imports, and the authorities are being more open about their advances, after 30 years of developing arms in relative secrecy.

Founded in 1968, the AIDC's profile was raised 25 years ago when Washington baulked on an aircraft sale, said CH Lee, chief of the company's military aircraft division. It has risen again in the past year as Taiwan again encounters resistance from the US over arms sales.

With revenues of 17.9 billion Taiwan dollars (604 million US dollars) in 2010, AIDC has updated its own fighter jet with better computer systems and improved radars.

Taiwan has also begun deploying supersonic missiles with a range of 130 kilometres on 12 frigates and eight other boats.

Also in the arsenal are a remote-controlled grenade launcher and a surface-to-air missile, as well as rocket launchers, sea mines and torpedoes.

A total of 161 new products were rolled out in August for the 2011 Taipei Aerospace & Defense Technology Exhibition, up from 137 at the same show two years earlier.

'There's an objective to show the public that we are continuing to enhance our research and development capability to pursue our own indigenous systems,' Deputy Defence Minister Andrew Yang said.

Despite advances in its own technology, Taiwan has lobbied hard for the United States to sell it the 66 new F-16s.

The request, first made in 2006, is expected to get a final answer by October 1, keeping US defence contractors on edge for the deal potentially worth 8 billion US dollars.

Those contractors also know that more business with Taiwan is likely to cost them opportunities in China, a lucrative aerospace market but unlikely to welcome its rival's suppliers.

But Taiwan would be making a burden for itself by rlying on its own systems, said David Wei, Taiwan-based executive vice president of US defence contractor Lockheed Martin Corp, which makes the F-16s.

'If you want to eat rice, do you want to buy a piece of land to grow it yourself?' he asked.

The island, however, has a strong track record across all technology classes for fast, reliable production, by keeping costs down through cheap labour and efficient supply chains.

'The advantage of Taiwanese companies is their precision,' said Albert Lin, sales manager with local aerospace computer maker WinMate Communication Inc. 'It's better than in the West. Quality control is good and development is quick.'

The quality of homegrown systems has also advanced over the past three decades, analysts say. And their experience with missiles in particular is well-established.

'Despite China's advancing military modernisation, it still has to overcome Taiwan's formidable missile threat,' said Wendell Minnick, Asia bureau chief of Defense News.

'I would not want to be on a Chinese destroyer or frigate in the Taiwan Strait during a war,' he said. 'Not that different from shooting fish in a barrel.'