Taiwan Defence and Security Report Q1 2012
Includes 3 FREE quarterly updates
The outcome of presidential elections in January 2012 will set the tone of cross-strait relations for the next few years.
While the People’s Republic of China (PRC) is known to favour the incumbent, Ma Ying-jeou of the Kuotmintang (KMT), a victory for the Democratic People’s Party (DPP) candidate Tsai Ing-wen would not represent the popular endorsement of a move towards Taiwanese independence that a DPP win might have signified in the past. Cross-strait tensions should therefore remain low regardless of the outcome of the poll, although ties with the Mainland will undoubtedly be smoother should Ma secure a second term. In mid-December 2011, a month before the vote, the election appeared too close to call.
From a security perspective, even most politicians from the independence-leaning Pan-Green camp now accept that the military balance between the PRC and Taiwan has shifted decisively in the mainland’s favour, to the point where a declaration of independence would be extremely reckless. As such, there is little appetite in Taiwan for altering the status quo.
The US, despite its legal obligation to help Taiwan protect itself against invasion, has shown little desire to redress this ever-growing strategic imbalance. In September 2011 the Obama administration announced a US$5.85bn arms package for the island that withheld many of the big-ticket items that Taipei had requested, notably new F-16 C/D fighter aircraft. Instead, the US will help upgrade Taiwan’s existing fleet of older F-16 A/B models. However, the stalled F-16 sale is a hot topic in Washington as well as in Taipei, and US politicians continue to lobby for the deal to go ahead. An Iraqi order for F-16s, announced in December, means that the F-16 production line, which had been nearing closure, is now guaranteed to stay open until at least 2015, ensuring that the argument over whether to sell Taiwan new jets will rumble on.
The F-16 upgrade programme, which is worth US$5.3bn, will equip Taiwan’s 145 F-16 A/Bs with AESA radars and new targeting and weapon systems. The fighters may also subsequently be re-engined. By mid- December, however, the upgrade programme faced the prospect of delays, with some lawmakers objecting to the fact that the Ministry of National Defense appeared set to hand the upgrade work to US defence firm Lockheed Martin without putting it out to competitive tender, as required by law.
In December the Taipei Times reported that another long-stalled military programme – submarine procurement – could finally be set to move forwards. The newspaper revealed that after a decade of trying to persuade the US to sell them new submarines, Taiwanese officials had finally given up and were instead preparing to initiate an indigenous submarine development programme. However, the costs and technical challenges involved would be extremely prohibitive, and the chances of any such programme succeeding are questionable.
The PRC, as well as Taiwan, is facing a period of political flux, with President Hu Jintao due to stand down in 2012. However, once the changeovers on both sides of the strait are complete a new phase of diplomacy could potentially begin. In November, Deputy Minister of National Defense Andrew Yang made clear that the Ma administration was willing to reach a peace agreement with the PRC, but that Beijing should first issue a goodwill statement removing the threat of force. Depending on how the political cards fall in Beijing and Taipei, a binding peace deal could perhaps be reached from 2013 onwards.
The outcome of presidential elections in January 2012 will set the tone of cross-strait relations for the next few years.
While the People’s Republic of China (PRC) is known to favour the incumbent, Ma Ying-jeou of the Kuotmintang (KMT), a victory for the Democratic People’s Party (DPP) candidate Tsai Ing-wen would not represent the popular endorsement of a move towards Taiwanese independence that a DPP win might have signified in the past. Cross-strait tensions should therefore remain low regardless of the outcome of the poll, although ties with the Mainland will undoubtedly be smoother should Ma secure a second term. In mid-December 2011, a month before the vote, the election appeared too close to call.
From a security perspective, even most politicians from the independence-leaning Pan-Green camp now accept that the military balance between the PRC and Taiwan has shifted decisively in the mainland’s favour, to the point where a declaration of independence would be extremely reckless. As such, there is little appetite in Taiwan for altering the status quo.
The US, despite its legal obligation to help Taiwan protect itself against invasion, has shown little desire to redress this ever-growing strategic imbalance. In September 2011 the Obama administration announced a US$5.85bn arms package for the island that withheld many of the big-ticket items that Taipei had requested, notably new F-16 C/D fighter aircraft. Instead, the US will help upgrade Taiwan’s existing fleet of older F-16 A/B models. However, the stalled F-16 sale is a hot topic in Washington as well as in Taipei, and US politicians continue to lobby for the deal to go ahead. An Iraqi order for F-16s, announced in December, means that the F-16 production line, which had been nearing closure, is now guaranteed to stay open until at least 2015, ensuring that the argument over whether to sell Taiwan new jets will rumble on.
The F-16 upgrade programme, which is worth US$5.3bn, will equip Taiwan’s 145 F-16 A/Bs with AESA radars and new targeting and weapon systems. The fighters may also subsequently be re-engined. By mid- December, however, the upgrade programme faced the prospect of delays, with some lawmakers objecting to the fact that the Ministry of National Defense appeared set to hand the upgrade work to US defence firm Lockheed Martin without putting it out to competitive tender, as required by law.
In December the Taipei Times reported that another long-stalled military programme – submarine procurement – could finally be set to move forwards. The newspaper revealed that after a decade of trying to persuade the US to sell them new submarines, Taiwanese officials had finally given up and were instead preparing to initiate an indigenous submarine development programme. However, the costs and technical challenges involved would be extremely prohibitive, and the chances of any such programme succeeding are questionable.
The PRC, as well as Taiwan, is facing a period of political flux, with President Hu Jintao due to stand down in 2012. However, once the changeovers on both sides of the strait are complete a new phase of diplomacy could potentially begin. In November, Deputy Minister of National Defense Andrew Yang made clear that the Ma administration was willing to reach a peace agreement with the PRC, but that Beijing should first issue a goodwill statement removing the threat of force. Depending on how the political cards fall in Beijing and Taipei, a binding peace deal could perhaps be reached from 2013 onwards.
Contents
Executive SummarySWOT Analysis
Taiwan Security SWOT
Taiwan Defence Industry SWOT
Taiwan Political SWOT
Taiwan Economic SWOT
Taiwan Business Environment SWOT
Global Political Outlook
Global Hotspots: Eurozone, MENA, Afghanistan And Korea
Table: Election Timetable, 2012
United States
Latin America
Western Europe
Central, Eastern And South Eastern Europe
Russia And The Former Soviet Union
Middle East And North Africa
Sub-Saharan Africa
Asia
Wild Cards To Watch
North East Asia Security Overview
The Geopolitical Importance Of North East Asia
Flashpoints And Faultlines In North East Asia
The Evolution Of North East Asia
Sino-US Power Struggle To Intensify Over The Coming Decade
Chinese Influence In Asia: A SWOT Analysis
US Influence In Asia: A SWOT Analysis
Table: Asian States And Their Relationships With China
Emerging Geopolitical Patterns
Security Risk Analysis
Table: Asia Pacific Regional Security Ratings
Table: Asia Pacific State Vulnerability To Terrorism Index
Taiwan’s Security Risk
City Terrorism Rating
Table: BMI’s Asia City Terrorism Index
Political Overview
Domestic Politics
Long-Term Political Outlook
Security Overview
Internal Security Situation
External Security Situation
Armed Forces And Government Spending
Armed Forces
Weapons Of Mass Destruction
Market Overview
Recent Changes
Arms Trade Overview
Industry Trends And Developments
Procurement Trends And Developments
Competitive Landscape
Industry Forecast Scenario
Armed Forces
Table: Taiwan Armed Forces, 2000-2008 (’000 personnel, unless otherwise stated)
Defence Expenditure
Table: Taiwan’s Defence Expenditure, 2009-2016
Table: Taiwan Defence Expenditure And % Of GDP, 2009-2016 (US$mn)
Defence Trade
Key Risks To BMI’s Forecast Scenario
Macroeconomic Forecast
Table: Taiwan – Economic Activity, 2011-2016
Company Profiles
Aerospace Industrial Development Corporation (AIDC)
CSBC Corporation, Taiwan
Chung Shan Institute of Science and Technology
Combined Service Forces
Country Snapshot: Taiwan Demographic Data
Section 1: Population
Table: Demographic Indicators, 2000-2030
Section 2: Labour Market And Spending Power
Table: Employment Indicators, 2000-2005
Table: Consumer Expenditure, 2000-2005 (US$)
Table: Average Annual Manufacturing Wages, 2005-2012
BMI Methodology
How We Generate Our Industry Forecasts
Defence Industry
City Terrorism Rating
Table: Methodology
Sources Skip to top