Taiwan Defence and Security Report Q3 2011
Includes 3 FREE quarterly updates
Taiwan enjoys strong economic ties with China and a close political relationship with the United States. Officially a ‘province’, it leads an economically strong but uncomfortable existence with the constant presence of international tension. To disrupt ties with China would cause economic loss, however, dependence on the United States for military equipment and their peacekeeping presence maintains a tentative regional stability constantly on the verge of disruption Little change in this condition is likely in the mid-term future. China’s discouragement of a declaration of independence by Taiwan is a disincentive to other countries were they to consider supporting the province. However, few Taiwanese are in favour of reunitification with China. As a result, Taiwan behaves as though it were its own nation, trades and negotiates as though it were, but cannot be party to international agreements or treaties since it is not a legal nation state.
The Taiwanese economy expanded strongly in Q111, with growth coming in at a solid 6.2% y-o-y and a seasonally-adjusted 3.2% q-o-q, according to the government's advanced estimates. This growth has been offset recently due to the natural disaster in Japan and the reduction in imports anticipated within China’s economy. Nonetheless, Taiwan holds a strong economic position and has strong internal stability.
It is Taiwan’s stated objective to become more self-sufficient, particularly in military matters. With a desire to maintain defence capabilities to deter China, the province has for years worked on developing its defence capabilities. Investment in development and education of both military and specialist personnel has enabled Taiwan to make progress in the development of aircraft, defence systems and advanced radar equipment. However, continued negotiations with the United States for military equipment have been deemed necessary to maintain pace against the rapidly strengthening China forces.
Access to the Foreign Military Sales programme also provides Taiwan the ability to acquire equipment and research advantages not available to sanction-limited China. In 2010, a large equipment purchase of F-16 fighters and diesel-electric submarines from the United States created a rift between the United States and China. Consequently, the United States has taken a cautious approach to the fulfillment of the contract and to date there is some doubt over the likelihood of actual delivery of the equipment.
Meanwhile, Taiwan is endeavouring to curb the size of its military and focus its energies in diversification of technology.
Taiwan enjoys political stability with two main parties, one leaning towards greater independence and the other taking a more prudent approach to relations with nearby powers. It is a densely populated area with a vested interest in maintaining internal solidarity since China has declared internal conflict a sufficient reason to take over. Situated inside heavily trafficked trade routes, Taiwan is able to benefit from diverse commercial activity. However, the suspected existence of gas seams and oil deposits within its boundaries ensure a jealous eye is kept on the island by all neighbouring nations who might stake a claim.
Taiwan enjoys strong economic ties with China and a close political relationship with the United States. Officially a ‘province’, it leads an economically strong but uncomfortable existence with the constant presence of international tension. To disrupt ties with China would cause economic loss, however, dependence on the United States for military equipment and their peacekeeping presence maintains a tentative regional stability constantly on the verge of disruption Little change in this condition is likely in the mid-term future. China’s discouragement of a declaration of independence by Taiwan is a disincentive to other countries were they to consider supporting the province. However, few Taiwanese are in favour of reunitification with China. As a result, Taiwan behaves as though it were its own nation, trades and negotiates as though it were, but cannot be party to international agreements or treaties since it is not a legal nation state.
The Taiwanese economy expanded strongly in Q111, with growth coming in at a solid 6.2% y-o-y and a seasonally-adjusted 3.2% q-o-q, according to the government's advanced estimates. This growth has been offset recently due to the natural disaster in Japan and the reduction in imports anticipated within China’s economy. Nonetheless, Taiwan holds a strong economic position and has strong internal stability.
It is Taiwan’s stated objective to become more self-sufficient, particularly in military matters. With a desire to maintain defence capabilities to deter China, the province has for years worked on developing its defence capabilities. Investment in development and education of both military and specialist personnel has enabled Taiwan to make progress in the development of aircraft, defence systems and advanced radar equipment. However, continued negotiations with the United States for military equipment have been deemed necessary to maintain pace against the rapidly strengthening China forces.
Access to the Foreign Military Sales programme also provides Taiwan the ability to acquire equipment and research advantages not available to sanction-limited China. In 2010, a large equipment purchase of F-16 fighters and diesel-electric submarines from the United States created a rift between the United States and China. Consequently, the United States has taken a cautious approach to the fulfillment of the contract and to date there is some doubt over the likelihood of actual delivery of the equipment.
Meanwhile, Taiwan is endeavouring to curb the size of its military and focus its energies in diversification of technology.
Taiwan enjoys political stability with two main parties, one leaning towards greater independence and the other taking a more prudent approach to relations with nearby powers. It is a densely populated area with a vested interest in maintaining internal solidarity since China has declared internal conflict a sufficient reason to take over. Situated inside heavily trafficked trade routes, Taiwan is able to benefit from diverse commercial activity. However, the suspected existence of gas seams and oil deposits within its boundaries ensure a jealous eye is kept on the island by all neighbouring nations who might stake a claim.
Contents
Executive SummarySWOT Analysis
Taiwan Security SWOT
Taiwan Defence Industry SWOT
Taiwan Political SWOT
Taiwan Economic SWOT
Taiwan Business Environment SWOT
Global Political Outlook
Japan After The Quake
Global Hotspots: Libya, Iran, Afghanistan, Korea
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
Security Risk Analysis
BMI’s Security Ratings
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 Structure
Recent Changes
Arms Trade Overview
Industry Trends And Developments
Procurement Trends And Developments
Competitive Landscape
Industry Forecast Scenario
Armed Forces
Table: Taiwan’s Armed Forces, 2000-2008 (‘000 personnel, unless otherwise stated)
Defence Expenditure
Table: Taiwan’s Defence Expenditure; 2008-2015
Table: Taiwan’s Defence Expenditure And % Of GDP, 2008-2015 (US$mn)
Defence Trade
Key Risks To BMI’s Forecast Scenario
Macroeconomic Forecast
Table: Taiwan – Economic Activity, 2008-2015
Company Profiles
Aerospace Industrial Development Corporation (AIDC)
CSBC Corporation, Taiwan
Chung Shan Institute of Science and Technology
Combined Service Forces
Country Snapshot: Taiwan Demographic Data
Section 1: Population
Table: Demographic Indicators, 2000-2030
Section 2: Labour Market And Spending Power
Table: Employment Indicators, 2000-2005
Table: Consumer Expenditure, 2000-2005 (US$)
Table: Average Annual Manufacturing Wages, 2005-2012
BMI Methodology
How We Generate Our Industry Forecasts
Defence Industry
City Terrorism Rating
Table: Methodology
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