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Under threat from China, Taiwan’s arms makers to develop weapons

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Standing on his company’s sprawling campus in central Taiwan, Lin Nan-juh says he’s able to make any plane his island’s threatened government calls for, reported The Japan Times.

“We can do whatever’s asked,” says Lin, president of Aerospace Industrial Development Corp., or AIDC, a leader in the defense industry serving the isolated self-governing island that China claims as its own territory and threatens to invade.

It’s a bold statement with potentially major significance for Taiwan’s democratic survival as it seeks to build up its domestic defense industry in the face of China’s threats and the reluctance of foreign arms suppliers to provide it with the planes, ships, submarines and other hardware it needs to defend its 23 million people.

While the U.S. — which is legally bound to respond to threats to Taiwan — continues to be its main arms supplier, Taiwan is increasingly looking to replace those politically fraught, touch-and-go deals with domestic production that is reliable as well as technologically advanced.

Taiwan’s indigenous systems are “both a source of national pride and a product of necessity,” said David An, senior research fellow with the Washington-based policy incubator Global Taiwan Institute. “As it’s commonly said, necessity is the mother of invention.”

The self-reliance policy has been strongly promoted by Tsai Ing-wen, Taiwan’s pro-independence president, whose government has been shunned by Beijing since shortly after she took office more than two years ago. Defense is included in Tsai’s economic program targeting eight industries for innovation and job creation, with the government helping match its defense needs with the abilities of Taiwanese companies.

China’s recent actions have underscored the risk for Taiwan.

Beijing has been upping pressure on the island by cutting its already tenuous diplomatic links and has sent military planes and an aircraft carrier close to the island multiple times. China now has the world’s second-largest defense budget after the U.S., significantly boosting its ability to blockade, attack and possibly invade Taiwan.

Taiwan’s domestic arms industry got started in the 1970s, more than two decades after Chiang Kai-shek’s Nationalist forces fled to the former Japanese colony after Mao Zedong’s communists seized power on the mainland in 1949.

Adoption and development of foreign technology gave companies such as AIDC much of what they needed to grow and help keep the peace with the mainland, said Mei Fu-shing, director of the Taiwan Security Analysis Center, a research and consulting practice based in New York.

“Indigenously developed and produced weapons have contributed materially to deterrence in the Taiwan Strait over the past three or four decades,” Mei said.

Taiwan’s capabilities have improved of late in both quality and technical sophistication, Mei said, pointing to the production of air-to-air missiles as an example. “Taiwan’s defense industry obviously has progressed,” making it less reliant on foreign sources, he said.

Along with protest actions from Beijing — including the suspension of exchanges with the U.S. military after a $6.4 billion arms package for Taiwan was announced in 2010 — U.S. sales are constrained by concerns about the leaking of sensitive advanced technology across the 160-km-wide (100-mile-wide) Taiwan Strait to China.

Despite that, such sales continue, with the Trump administration notifying Congress last year of its intent to approve seven proposed deals for technical support, anti-radiation missiles, torpedoes and other technology valued at around $1.42 billion.

And last month, the administration agreed to allow U.S. firms with the technology to build much-needed diesel-electric submarines. The Taiwan Navy today operates just two aging subs bought from the Netherlands in the 1980s.

Analysts say sales of technology are less likely to prompt a strong response from China than those of complete systems such as planes or submarines.

Along with fighter jets and other aircraft, Taiwanese contractors already make anti-ship, surface-to-air and air-to-air missiles, as well as missile boats and Clouded Leopard armored vehicles. Taiwan has long been known worldwide for its civilian high-tech industry and about 200 small and mid-sized companies work in defense.

AIDC and the National Chung-shan Institute of Science and Technology are among the larger contractors. The aerospace firm reported sales income of $235 million and a net profit in the third quarter of 2017, the most recent made public online.

More than 3,000 people work on new aircraft designs at AIDC’s tree-lined campus, complete with a restaurant and a swimming pool. One of its planes marks a front entrance.

Despite the advances, Taiwan will never be able to quit buying advanced weapons from other countries, according to Defense Ministry spokesman Chen Chung-chi. Propulsion systems and engines for ships and aircraft are a particular need, and Taiwan sometimes finds that imports cost less than local production.

Yet such sales carry the risk of being used as bargaining chips to gain concessions from Beijing, particularly on trade. Ultimately, officials in Washington might help Taiwan’s military again only if they see its capability decline, said Alexander Huang, strategic studies professor at Tamkang University in Taiwan.

“Taiwan worries that there might be a time that we can’t buy the weapon system that we want, so we better build up our indigenous defense industry capability,” Huang said.

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Minister of National Defense Yen De-fa confirmed plans to bring forward the nation’s construction of 11 Tuo Jiang-class corvettes by completing them in two instead of three phases, reported Taipei Times (Taiwan).

Yen made the comments at a meeting of the legislature’s Foreign Affairs and Defense Committee in response to Democratic Progressive Party Legislator Lo Chih-cheng’s question about whether the military is making adjustments to counter the Chinese threat.

The corvette is a crucial piece of the military’s asymmetric warfare and shortening its construction schedule would increase the nation’s combat capability, Yen said.

The ministry purchased 12 corvettes in total, with the first ship delivered in 2014, it said.

The other 11 corvettes are to come in two types: The first three anti-aircraft models are to be completed by 2025, while five anti-ship models, which were originally scheduled to be completed between 2030 and 2032, are to be brought forward to 2025, the ministry said.

The completion of the third batch, originally planned for 2039, could be moved forward as the need arises, it said.

The armaments of the third batch, whilst unknown, could include the extended range versions of the Hsiung Feng II (HF-II) anti-ship missiles and the HF-III missiles, which offer more effective deterrence against enemy vessels, the ministry said.

With a displacement of 700 tonnes, the anti-air variants are to be armed with ship-launched Tien Chien II missiles, while the anti-ship variant are to carry HF-II anti-ship missiles and HF-III supersonic anti-ship missiles, the ministry said.

The ministry has opted to contract the construction of the surface platforms via an open bid, but would commission the Chungshan Institute of Science and Technology to design and install the combat systems onboard, the ministry said.

The commission agreement and the public bid are to begin next month and should be completed by October, it said.

Navy Command Headquarters Chief of Staff of the Navy Vice Admiral Lee Tsung-hsiao told lawmakers he is confident that the open bid would conclude successfully and that construction could begin next year.

Construction of the second batch will not necessarily have to wait for the completion of the first batch, Lee said, adding that it could begin as soon as next year or in 2020.

Yen also told the committee that the national defense budget would surely increase more than 2 percent for fiscal 2019.

The ministry will comply with President Tsai Ing-wen’s instructions on increasing the national defense budget as a percentage of GDP by no less than 2 percent of the previous year’s budget, the ministry’s Comptroller Bureau Director Chen Kuo-sheng said.

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