History of Global Arms Transfer, 9 (2020), pp. 3-25

Taiwan’s Security Policy since the Cold
War Era:A Review of External Military Assistanceand the Development of Indigenous
Defence Industry
By FU-KUO LIU*
Throughout the Cold War era, the ROC’s national security was threatened by the
PRC’s enmity. Even in the present day, the ROC’s national security strategy
focuses overwhelmingly on addressing military threats from the People’s
Liberation Army (PLA). Although the US has, over the years, granted hardware
and software to Taiwan to strengthen its defence capabilities, Taiwan has
remained far from independent in defence modernisation and national security.
For Taiwan, a hard lesson learned from changes to US policy in Asia and otherbilateral relations was that the US will only invest in countries that will bear fruit
for it. Post-World War Two economic development in Taiwan has been closely
linked to political attempts to develop a strong indigenous defence industry, withthe aim of ensuring Taiwan would be able to avoid the potential risks associatedwith changes in US policy. The development of an indigenous defence industry
thus became critical and would go on to gain prevailing support in domestic
politics. Taiwan’s development of an indigenous defence industry started withthree public institutions/organisations and gradually networked more than 200
indigenous SMEs. Over the decades, the country has built a very useful andpromising defence industrial chain, reflecting more generally the benefits ofeconomic development for Taiwan.

I Introduction
Ever since the end of the Second World War, due to the continuing civil war between theCommunist Party of China and the Nationalist Government, the fates of China (thePeople’s Republic of China, the PRC) and Taiwan (Republic of China, the ROC) have been
decided not by themselves but by the changing international environment; this was
especially the case after the Nationalist Government was defeated in the civil war andconsequently relocated to Taiwan in 1949. Defeat in the civil war posed a great threat to thesurvival of the ROC. Externally, the National government crumbled completely and lost
control of the whole mainland to the communists. At this low point, the US government* Author Affiliation: Research Fellow, Institute of International Relations, National Chengchi University,
Taipei, Taiwan.

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FU-KUO LIU
under President Truman decided not to resume support of the ROC’s leadership, ChiangKai-sheik and his government, after the PRC was formally established. The reluctance of
the US to support the Nationalists indicated a lack of faith in Chiang Kai-sheik’s leadershipand his competence to rule the country. Importantly, Truman’s administration decided tofocus its Cold War efforts of containing communism on Europe rather Nationalist China,
and this policy would eventually result in the Chinese Communist victory in mainland
China.1 Without any external support, the sustainability of the ROC was at tremendous risk.
Internally, the Nationalist Government was perceived by the people as being corrupt, illfated, inefficient, pathetic and incapable. In no way could the Nationalists gain immediate
support from the people of what was fast becoming a panicked and disordered society.
At first, the chaotic government arrived in Taiwan in 1949 and the civil war continued.
The ROC government did not have sufficient competence to govern, nor to defend itself;
the leadership, governmental organisations and overall morale of the ROC were under
threat. The political atmosphere was very uncertain and the government needed time torecover and reorganise after its comprehensive defeat. Under such circumstances, theROC’s fragile defence capabilities were not sufficient to keep the island free from
communist military attack. After the Second World War, the ROC had been too exhausted
to implement any new nation-building processes alone, let alone regenerate its security
policy. It therefore needed external assistance from the US. Then, in June 1950, with thesupport of the Soviet Union and the PRC, North Korea invaded South Korea. The Korean
War disintegrated into a war between the US-led alliance and the Communist Camp. As aresult, the Cold War was ignited. The cause of the Korean War was seen by the UnitedStates government as a Communist expansion effort attempting to break through thedefence line of East Asia and therefore as a threat to US strategic interests; as a result, theFirst Island Chain (Japan, the Ryukyus, Taiwan, the Philippines and Borneo) and theSecond Island Chain (Japan, Guam, Indonesia and Australia) were created to containcommunism2, establishing what became known as the ‘hub-and-spoke’ security alliancesystem, linking bilateral and multilateral security arrangements in the Asia Pacific region.
In doing so, the US tightened its military alliances with Japan, Taiwan, South Korea, thePhilippines and others in the region. Based on the concept of island chain defence, Taiwan’s
strategic importance was substantially recognised and enhanced.
The aftermath of the Second World War showed that countries in the region were
extremely unlikely to recover fully by themselves, as most of them had suffered or were
suffering the setbacks of either civil wars or wars of independence. As a result of Cold War
strategic thinking, the US incorporated these Asian allies into its wider strategic picture asa way of supporting its overall defence capabilities and strengthening the American sphereof interest. The US was, on the one hand, committed to protecting and ensuring the securityof its allies in the region; on the other hand, it also sought to strengthen its global strategic
position against communist expansionism. With these goals in mind, the US helped boost
the defence capabilities of those allies to support the defence of the two Island Chains in
the West Pacific. By doing so, the US has since then supplied a security umbrella to thoseregional allies, such as Japan, South Korea, Taiwan et-al.
This paper intends to examine the transformation of Taiwan’s security policy under the
support of the American security alliance system during the Cold War era. By examining
1 Hamby, A. L., ‘Harry S. Truman: Foreign Affairs’, UVA/ Miller Centre, 2019, https://millercenter.org/
president/truman/foreign-affairs.
2 Yoshihara, T., ‘China’s Vision of its Seascape: The First Island Chain and Chinese Seapower’, Asian Politics& Policy, 4:3 (2012), p. 297.

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Taiwan’s Security Policy since the Cold War Era
security policy, it will also focus on security partnerships between the US and Taiwan.
Within such a US-led alliance, American security structures have shaped the fundamental
structure of Taiwanese security and supported the emergence of an indigenous defence
industry. Since the US has consistently assisted Taiwan in strengthening its defence
capabilities in all areas, Taiwan’s defence industry has been generated by American policy
during and after the Cold War. This paper will therefore also argue that the development of
an indigenous defence industry in Taiwan has been generated by national security concerns
about the changing nature of relations between great powers.

II Civil War and the Revival of the ROC’s National Security in Taiwan
After being defeated in the civil war in mainland China, the Nationalist Government wasplunged into disorder and fled to Taiwan. At first, the government which re-establisheditself in Taiwan realised that, with little access to resources, it was highly vulnerable tomilitary attack. It was therefore critical for the ROC to shift its political centre from
Nanjing to Taipei, so as to transform the geopolitical foundation from mainland- tomaritime-oriented thinking. Thereafter, the ROC’s national security policy gradually shiftedto the security context of the maritime domain. Although the government settled hastily in
Taiwan, the first stage of the ROC’s national strategy was overshadowed by military
objectives: the early stages of national security policy development aimed to take advantage
of Taiwan’s remaining resources to prepare to fight another war. The core focus of national
strategy at that time was to recover the mainland, ensure Taiwanese security and develop
Taiwan. It was that the country prioritised its strategy.
The ROC Nationalist Government, when it first arrived in Taiwan, anticipated winningback the mainland within three to five years of fighting. It therefore did not have a longterm plan to settle in Taiwan, but instead anticipated launching a war back on the mainland.
However, the ROC did not have clear support from the US, as the US government hesitatedto grant support to the corrupt and incapable Nationalists. In 1949, the PRC was formallyestablished as the communist regime on the mainland. Seen by the US as a new opportunity
to be engaged with, the PRC’s position was critical in Asia. To begin with, the US
government waited, hoping to formally engage with the PRC, and anticipated abandoning
the ROC in due course. Militarily, the ROC was weakened further after it was defeated in
the civil war and did not have any external support. Diplomatically, as the PRC gradually
gained ground, the ROC was quickly losing the support of the international community.
Domestically, the chaotic society in Taiwan resulted from a hasty settlement from mainland
China and did not have a clear vision for the future. During this critical period, however,
the military forces of the ROC defeated the Chinese Communist Army in the Battle ofGuningtou, in October 1949, and the Battle of Dengbu Island, in November 1949. These
victories, which successfully deterred the PLA’s ambition to march through quickly to
Taiwan, helped drive up confidence and moral in Taiwan. The ROC government decided torestructure its strategic deployment by withdrawing its military from Hainan and Chousang
Islands.3 The Nationalists from this point forward would focus more on Taiwan’s defence,
making it much harder for PLA to invade.
The US at this time was also evaluating the strategic importance of Taiwan to the region.
According to US Cold War strategic thinking, it was necessary for the US to help defend
3 Ministry of National Defense, ROC, 1992 National Defense Report ROC, (Ministry of National Defense,
ROC, 1992).

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Taiwan in order to secure sea lanes of communication near Taiwan. The US Joint Chiefs ofStaff indicated as much to the personal Chief of Staff to President Roosevelt, William D.
Leahy, in a 1948 report entitled ‘The Importance of Formosa’:
Studying various plans for Allied entry into the strategic triangle, the Joint Chiefs andtheir subordinate advisory committees concluded that Formosa constituted the mostimportant single objective in the target area. The island possessed so many obvious
advantages and was located in such a strategically important position that most planners
in Washington believed the Allies would have to seize it no matter what otheroperations they conducted in the western Pacific. Until they seized Formosa, the Allies
would be unable to establish and secure an over water supply route to China.4
Although the thorough assessment of the Asian situation reflected American strategicinterests, the focus on Taiwan was not taken into policy consideration by the Truman
administration until the Korean War. Nevertheless, it was this same strategic thinking that
supported Taiwan at its most vulnerable moment. From a strategic perspective, in light of
the risk of communist aggression, the US could not afford to lose Taiwan to the opposing
side. Taiwan’s pivotal strategic position has been recognised since the end of the Korean
War.

III The Aftermath of the Korean War and Crises in the Taiwan Strait
In 1950, the outbreak of the Korean War initiated significant changes to Asian security
structures. Because communist expansionism posed an immediate threat to regional
stability, the United Nations Security Council quickly passed Resolution 83, which called
for military assistance for South Korea. The US led UN troops to engage in war with North
Korea. The US tried to revive the economic and military capabilities of war-torn Japan andthe ROC in order to meet the industrial demands of the war. According to US geostrategic
assessments, strengthening Taiwan’s strategic position was in accordance with US national
interests. The US developed the island chain strategy, which was part of the wider
containment policy against communism, the so called ‘Truman Doctrine’, to include
Taiwan. From a geopolitical perspective, Taiwan’s geographic location is critical to thesuccess of containment policy. The Korean War, therefore, was critical to the ROC’s
national security, as it not only redefined the strategic importance of the ROC in thegeopolitical context of the Asia Pacific region, but also changed the American strategic
perspective in the region vis-à-vis the ROC. The US resumed military support of the ROC,
accelerated the negotiation of the Sino-American Mutual Defence Treaty and signed thetreaty in 1954. As a result, the ROC was formally brought into the American alliancesystem. As well as successfully stopping the PRC’s attempt to invade Taiwan immediately
after it was established in 1949, therefore, the Korean War also helped prevent deteriorationof the ROC’s international status. These positive outcomes were only partially marred by
US decision-makers’ questionable articulation of this policy as ‘neutralising’ Taiwan,
4 Robert Ross Smith, Command Decision: Luzon Versus Formosa, (Washington D.C.: Center of Military
History, United States Army, 1990), p. 463; ‘Memorandum by the Executive Secretary of the National Security
Council (Souers) to the National Security Council, ‘Importance of Formosa’, NSC-37 g (2)’, Office of Historian,
US Department of State, Washington, 30 December 1949, https://history.state.gov/historicaldocuments/
frus1949v07p2/d387. Section g(2).

6Taiwan’s Security Policy since the Cold War Era
thereby undermining its legal status.5
When the PRC was established in 1949, a number of countries in the world severed
diplomatic relations with the ROC in order to establish them with the PRC instead. The
ROC’s diplomatic outreach began a decline that has continued to the present day: as of2018, only seventeen countries officially recognise the ROC. Nevertheless, subsequent US
aid helped renew Taiwan’s hopes of re-establishment and fend off complete collapse after
defeat in the civil war. There are two significant strategic reasons why the US continues tosupport the ROC. First, Taiwan is located at the geographic centre of the first island chain
against communism in East Asia. Second, revival of the ROC symbolizes US serious
commitment to the region and its allies.
After the Korean War ended in 1953, the PRC quickly regenerated its political momentum
to shift away from the Korea Peninsular to begin its military campaign for unification in
the Taiwan Strait. In August 1958, China launched a new war, shelling Kinmen Island for
44 days consecutively. It was regarded as the second Taiwan Strait Crisis. The shelling
continued periodically from August 1958 to December 1979. As the war threatened the
ROC’s national security, the government hastily decided to push for military reform. The
ROC’s first military reform was launched during these crises, mainly as a means ofrestructuring troop organisations regrouping from mainland China.
Since the ROC’s relocation to Taiwan, therefore, its policy has been deeply influenced by
US Asian policy in general and its bilateral hostile relation with China in particular. Whengeopolitics shifted, the relations among the US, the Soviet Union and China were alsotransformed. The changes have deeply influenced US policy toward China and thus
Taiwan’s national security.

IV Stages of Taiwan’s Defence and Military Reform
Throughout the last few decades, the ROC was very much under the shadow of the security
threat posed by the PRC. Because the PRC regards Taiwan as a renegade province ofChina, changes in the level of hostility in the cross-strait relationship do not fundamentally
alter Beijing’s determination to unify the nation. The pace of US-ROC (Taiwan) relations
has fully depended on the development of US-PRC relations. When China directly enteredinto the Korean War fighting against US-led alliance forces, the US was left without muchchoice other than to boost Taiwan’s defence capabilities as part of its global anti-communist
campaign. Through the Sino-American Mutual Defence Treaty signed in 1954, Taiwan wasable to press ahead on its long path of military modernisation, helped by the wide variety
of its cooperative arrangements. 6 The US has since then supplied advanced weaponssystems to help upgrade Taiwan’s military hardware and strengthen its military capabilities.
In addition, the US also provided considerable support with military software, such as theinstitutionalisation of joint training and exercises. Over the years, US-Taiwan defence
relations became the only official channel existing to help facilitate and internationalise
Taiwan’s defence networks; diplomatic isolation has taken toll on Taiwan’s political anddefence relations with other nations.
Together with the mutual defence treaty, the US Military Assistance Advisory Group in
Taipei was established to help Taiwan proceed with defence reform and to assure the5 Lin, C., ‘The Legacy of the Korean War: Impact on U.S.-Taiwan Relations’, Journal of Northeast AsianStudies, 11:4 (Winter 1992), pp. 42-43.
6 Huang, A. C., ‘The United States and Taiwan’s Defense Transformation’, Brookings Op-Ed, 16 February
2010, https://www.brookings.edu/opinions/the-united-states-and-taiwans-defense-transformation/.

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security and continuity of the ROC government in Taiwan. More importantly, in terms ofdefence networks, the mechanisms built between the US and Taiwan enabled them toengage in a comprehensive network of military alliance systems, allowing Taiwan to form
links with other regional partners.
Under the framework of the Mutual Defence Treaty signed in 1954, the US and ROC
military-to-military relationship was built on a solid foundation. Although it lasted until the
US–China normalisation in 1979, the bilateral military-to-military relationship has beenfurther deepened in the years thereafter. In other words, the role played by the US in themodernisation of Taiwan’s defence network is undeniable. The formal alliance between the
US and the ROC persisted until the US began to favour the PRC to balance the influence ofSoviet Union. The transformation of defence strategy in Taiwan has also been impacted bysignificant geopolitical changes, especially among the great world powers.

V Impacts of US-China Normalisation on Taiwan’s Security Policy
During the Cold War era, Soviet expansionism gained the upper hand in many parts of theworld, thereby challenging American dominance. When serious disagreement aboutcommunist doctrine emerged between China and the Soviet Union in the 1960s, American
strategic calculations took into consideration two key factors: firstly, if China would alignwith the US, it would shift global power structures in favour of the US against the Soviets,
and secondly, alliance with China would grant the US access to tremendous market
potential in China. 7 China’s increasing influence in the international community wasconsidered useful as a means of filling the gaps in containment policy against international
communism. As US President Richard Nixon sought for a diplomatic breakthrough with
China, his administration orchestrated a blunt but secret rapprochement process leading tosuccessful US-China normalisation. In the strategic shift to alignment with China, the US
naturally gained a strategic advantage vis-à-vis the Soviets.
Just as the US triggered the process of strategic change, US-China rapprochementchanged the course of traditional hostile China policies, resulting in a redistribution ofstrategic configurations in Asia. When the US made a new move to shift its strategicalignment with PRC, its traditional policies with regard to the PRC were likewise reviewed.
Relevant US policies in Asia, and especially policies pertaining to the ROC and the PRC,
were greatly affected. As a result of the change in US policy, the ROC’s representation in
the United Nations was first challenged and then lost, with the PRC gaining their seat in1971. Once the US could confirm normalisation with the PRC, the communist security
threat against the ROC was intentionally played down by the US. Defence cooperation
between the US and Taiwan stagnated and the progress of Taiwan’s defence modernisation
also slowed down. By the 1970s, China had started to cultivate sufficient ground in theinternational community to welcome President Jimmy Carter onto the scene The Carter
Administration anticipated potentially high political dividends for pushing normalisation
with China in the complicated contexts of domestic and external politics. If China alignedwith the US, the effects would include a weakening of the communist camp, redirecting
China’s course of development toward international cooperation rather than confrontation.
The result for the ROC government was declining faith in the strength of US support, as
US policy shifted more obviously in favour of China. Taiwan, in turn, became more
7 Goh, E., Constructing the US Rapprochement with China, 1961–1974: From ‘Red Menace’ to ‘Tacit Ally’(Cambridge University Press, 2005), pp. 10-12.

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pragmatic in its policy toward China and attempted to establish greater independence from
US military assistance. 8 One unsuccessful example of an attempt by Taipei to be
independent in its development of defence capabilities was a nuclear weapons program,which was forced to end by the US government in 1987. 9 The ROC’s policy makers
reflected strategic apprehension and sound political will to pursue strategic independence.
The ROC was diplomatically isolated by the PRC for a long time and was left without
many reliable suppliers in the international community. Political difficulties also seriously
hampered its efforts to conduct defence modernisation.
Political obstacles in international politics continue to limit Taiwan’s hope for overall
defence modernisation. Restricted international arms markets present another difficulty to
be overcome if Taiwan is to advance its defence modernisation and military technologies.
In such a political difficult context, development of an indigenous defence industry would
seem to be the only possible solution. As President Tsai Ing-wen stated, on the occasion oflaunching construction of a facility to build Taiwan’s first indigenous submarines, ‘[b]uilding submarines at home is the only way out’.10

VI Emergence of an Indigenous Defence Industry in Taiwan
During the 1950s and 1960s, the ROC’s national security was seriously threatened, as the
ROC and the PRC engaged in a heated diplomatic struggle for the right to represent ‘China’in the United Nations and related international organisations, and the military threat of the
PRC to the ROC increased dramatically. Under such a serious threat, improvement of
national defence capabilities became the top priority for Taipei. In order to bolster the
defence industry and prevent overdependence on external military assistance, the thenMinister of Defence, Chiang Ching-Kuo, ordered the establishment in 1965 of the National
Chung-Shan Institute of Science and Technology (NCSIST)11, pioneering the initial stagesof arms and military technologies production. Although industrial development begun in
Taiwan only in the 1960s, the political will of the leadership in this area was strong andclear. Approved by the then President, Chiang Kai-Shek, the NCSIST was formallyestablished in 1969. Before the NCSIST was established, the ROC had a poorly organised
national defence industrial program. The NCSIST has led a systematic development ofdefence capabilities build-up with research and development and manufacturing.
At this historical juncture, there were two main factors driving the establishment of selfdefence development in Taiwan. The first was the sea change in US Asian policy during the
Nixon era with the establishment of the ‘Nixon Doctrine’ in 1969. Nixon stated that ‘theUnited States would assist in the defence and development of allies and friends’, but would
8 Lee, B., The Security Implications of the New Taiwan (International Institute for Strategic Studies Adelphi
Paper 331, 1999), pp. 20-21.
9 For the detailed reason why Taiwan was forced to called off the entire nuclear weapons program, please referto the publication below. David Albright, and Andrea Stricker, Taiwan’s Former Nuclear Weapons Program:
Nuclear Weapons On-Demand (Institute for Science and International Security Press, 2018). http://isis-online.
org/uploads/isis-reports/documents/TaiwansFormerNuclearWeaponsProgram_POD_color_withCover.pdf
10 ‘Taiwan Begins Work on 1st Indigenous Submarine Facility’, Kyodo News, 9 May 2019, https://english.
kyodonews.net/news/2019/05/b86865a4528c-taiwan-begins-work-on-1st-indigenous-submarine-facility.html.
11 When it was established in 1969, CSIST was part of Armament’s Bureau of the Ministry of National Defense
conducting in the development, manufacturing and sale of various weapons systems and dual use technologies.
In 2014, the CSIST was transformed into an administrative corporation supervised by the Ministry of National
Defense and the name was formally changed to the National Chung-Shan Institute of Science and Technology(NCSIST).

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not ‘undertake all the defence of the free nations of the world’.12 This doctrine meant thateach allied nation was in charge of its own security in general, but the United States would
act as a nuclear umbrella when requested. The Doctrine argued for the pursuit of peace
through partnership with American allies. As such, the US would directly reduce military
aid to its allies and shift to boosting the development of their indigenous defence industries
instead. According to President Nixon’s report to Congress in 1973, the US defined three
types of foreign assistance: security assistance, humanitarian assistance and economic aid.
He asserted, furthermore, that ‘[s]ecurity assistance (including military aid and economic
assistance) is vital to help friendly countries develop the capability to defend themselves’.13
The report alerted Taiwan’s security decision-makers at the time to place more emphasis on
efforts to develop the indigenous defence industry than on seeking US military assistance.
The second factor driving the establishment of self-defence development was thecomplicated nature of arms procurement in the context of US-China relations, due to theincreasing diplomatic difficulty Taiwan encountered since early the 1970s, when the ROC
left the UN in 1971. In particular, since President Nixon sought for diplomatic
normalisation with the PRC, Taiwan’s arms procurement from the US has become evermore challenging. Since 1979, when the US broke off its formal diplomatic relationshipwith the ROC, the issue of US arms sales to Taiwan has continued to be a critical politicalissue between the US and China. As China grows more powerful and influential,
challenging the dominance of the US in the last two decades, US arms sales to Taiwan havebecome not only a political but also a strategic issue vis-à-vis China. This has in turnincreased the unpredictability of Taiwan’s national defence build-up and has complicatedstrategic planning.
Over the years, Taiwan has developed a very strong private-sector industrial base,particularly in commercial manufacturing. Regarding domestic production of defence
equipment, organisations are directly overseen by the Ministries of National Defence andEconomic Affairs. The defence industry depends on government funding and policy
demands they follow the government’s guidelines for developing and conducting defence
trade. The ROC’s development of its defence industry is concentrated in threeorganisations: the NCSIST, the Combined Service Forces of the Ministry of National
Defence (CSF) and the state-run Aerospace Industrial Development Corporation (AIDC).
In addition, academic institutions and public enterprises, most notably the China
Shipbuilding Corporation, all play a significant role in the production of defence
equipment.
Taiwan has adopted an industrial development process for building defence industries
that is quite similar to those adopted in developing countries. In general, the pattern ofindustrial development in many developing countries follows four incremental steps:14(a) Initial importation of arms from foreign suppliers;(b) Gradual creation of maintenance and overhaul capabilities and related facilities,
including the manufacture of spare parts, made possible by the provision ofequipment, data, training and supervision from foreign sources;(c) E ventual assembly and production of major weapons under license, to include
12 ‘Report by President Nixon to the Congress: US Foreign Policy for the 1970s: A New Strategy for Peace’,
Office of Historian, US Department of State, Washington, 18 February 1970, https://history.state.gov/
historicaldocuments/frus1969-76v01/d60.
13 Industrial College of the Armed Forces, National Security Seminar: Background Readings, (Industrial
College of the Armed Forces, 1973), p. 95.
14 Nolan, J. E., Military Industry in Taiwan and South Korea, (Palgrave Macmillan, 1986), p. 45.

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varying levels of technical participation by the host country;(d) I ndigenous design, development and production of systems.
Study of the histories of several established organisations reveals that the development ofdefence industries in Taiwan follows these steps exactly. The fact that in 1960s, national
economic development was also catching up in terms of technology made the production ofadvanced military equipment possible later. During the 1960s and 1970s, although the ROC
went through the painful experience of diplomatic setbacks and military threat from the
PRC, its economy made a surprising recovery. The Ministry of National Defence (MND)
made it very clear that the defence industry was closely interrelated with the technologicallevel of national industry. In order to raise the standard of domestic industrial technology,
thereby leading to a self-reliant defence industrial system, the MND has long been ‘making
good use of the national defence industrial development fund for assisting those public andprivate enterprises to cultivate qualified technical personnel and purchase facilities;
bringing in more advanced science and technology; and developing more sophisticatedproduction, so as to meet the demands of national defence and to strike the roots of defence
industry into civilian society’.15 Therefore, during that time, together with the National
Science Council, the Ministry of Education and the Ministry of Economic Affairs, the
MND established new mechanisms to strengthen cooperation between academic andindustrial sectors, and issued the ‘Defence Science and Technology Development Plan’.
More importantly, based on national transformation of economic development, the MND
then made efforts to guide public and private enterprises, including small- and mediumsized enterprises (SMNs), to enhance their capabilities for weaponry and armament
production. It was the beginning of civil-military cooperation for the development of theindigenous defence industry.
For decades, Taiwan has learned the hard way to develop its indigenous defence industry
under politically difficult circumstances in the international community. With foreignassistance it has successfully managed to develop its own fighter aircraft, missile systems,
surface ships, radars, rocket artillery, armoured vehicles and assault rifles. Now, it has evenexpanded to the development of indigenous submarines. Taiwan has developed an advanced
economy with the capability to manufacture cutting-edge information technology. In 2018,
Taiwan’s indigenous defence industry grossed over $2.3 billion US dollars in revenue,
amounting to about 23 percent of its annual defence budget.16 Although the revenue wasmainly shared among three major government-affiliated organisations/companies – theNational Chung-Shan Institute of Science and Technology, the Aerospace Industrial
Development Corporation and the China Shipbuilding Corporation – SMEs are wellconnected to these major players and are able to both profit and contribute.
The Leading Role of the National Chung-Shan Institute of Science and Technology(NCSIST)
In light of the international political downturn, the government in Taipei quickly moved toestablish an indigenous defence industry. All political setbacks have facilitated Taipei’sdetermination to push the progress of building an indigenous defence industry. The
emergence of the NCSIST reflected the strategic vision of the ROC’s decision-makers
during that time. The NCSIST’s early work included various missile and radar systems, as
15 Ministry of National Defense, ROC.
16 An, D., Schrader, M., and Collins-Chase, N., ‘Taiwan’s Indigenous Defense Industry: Centralized Control ofAbundant Suppliers’, Global Taiwan Institute, May 2018, http://globaltaiwan.org/wp-content/uploads/2018/05/
GTI-TW-Indig-Defense-Occasional-Report-May-2018-final.pdf.

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well as systems integration for ROC military aircraft and ships. The NCSIST was also, andremains, active in military construction. After the United States shifted diplomatic
recognition from the ROC to the PRC, the NCSIST became even more important as
Taiwanese authorities felt they could no longer view the United States as a reliable andexclusive defence partner and supporter. Establishing the ability to design and manufacture
weapons systems became even more significant to the ROC authorities. To this day, the
NCSIST continues to lead the development of indigenous defence industry in Taiwan.
The Hsiung-Feng (HF) anti-ship missile, inspired by the Gabriel missile (Israel), is anemblematic product of the NCSIST. In late 1960s, the PRC not only bought anti-ship
missiles from the Soviet Union, but also began its own anti-ship missile development
project. In order to fight against the PRC, the NCSIST began the HF program in the 1970s,
but development did not progress smoothly during the early stages. It was not until 1983
that the first generation of HF missiles were successfully developed and deployed in thewarships of the ROC navy. The HF program is still progressing and developing the next
generation of anti-ship missiles with increased speed and operational range.
The NCSIST started the Tien-Kung (TK) anti-tactical ballistic missile system in the late1970s based on its previous experience with propulsion systems from pioneer projects. In
1984, the first model of the TK missile, propelled by a solid rocket engine, was successfully
developed. A compatible phased-array radar system was designed at the same time forbetter guidance and control. The TK series is still the main air defence missile deployed in
Taiwan to date.
The NCSIST developed several famous global weapons systems for the self-defence of
the ROC from 1969 to the 1980s; however, the government of the ROC has not beensatisfied to rest on its laurels. The two missiles systems have been continually modified andupgraded with the latest technologies, while another project for developing an indigenous
defence fighter aircraft was initiated in the early 1980s. This project was dominated by thegovernment-funded Aerospace Industrial Development Corporation (AIDC) and the
NCSIST and included the development of the four necessary components of a fighter
aircraft: the airframe, propulsion system, avionics system and weapons system. In 1989,
the first Taiwanese-developed indigenous defence fighter aircraft made its first successful
flight test. Later, this fighter was named AIDC F-CK-1 Ching-Kuo to memorialize theformer president of Taiwan, Chiang Ching-Kuo. During the 1990s, more than 130 of thesefighters were manufactured and most of them are still in service today. The weapons system
employed on AIDC F-CK-1 Ching-Kuo is the Tien-Chien (TC) air-to-air missile, which
was developed at the same time as the AIDC F-CK-1 Ching-Kuo. These short-range
infrared-guided missiles provide all-aspect engagement capabilities and vigorously
strengthen the air defence of the island.
In addition to missile systems, fighter aircraft and radar, the NCSIST is also involved in
the development of simulators, digital warriors for cyber space, satellite communication
devices, specific materials and other items and continues to introduce the latest militarytechnologies into existing products. Although the progress of self-defence capability
development in Taiwan has slowed since 2000, president Tsai, who won the election in2016, has encouraged the further development of self-defence, and her government has
invested considerable funds and effort into next generation weapon systems.
The NCSIST jointly conducts independent research and development of weapon systems
with the Aero Industry Development Centre, which is now under NCSIST supervision;some manufacturing units of the Combined Services Force; academic institutions; and12

Taiwan’s Security Policy since the Cold War Era
public and civilian industries. To date, a significant number of weapons systems andcredible technologies have been domestically designed, tested and produced on a massscale by the NCSIST.17
The Combined Service Forces (CSF), Ministry of National Defence
The Combined Service Forces (CSF) serves as the logistical command responsible for the
production of ordinance, military maps and communications equipment for Taiwan’s armed
forces. The CSF also provides support and services commonly utilized by all armed forces
services, such as finance, surveying, engineering, rear echelon administration andarmament appraisal and testing. As part of the defence industry developed within the
defence establishment, the CSF’s main responsibility has been to produce weapons andequipment for troops. By manufacturing weapon systems, the CSF takes on the
responsibility of maintaining high capability rates for weapons at all times and enhancing
combat capability.
Over the years, the CSF and the NCSIST have jointly developed the following weapons:18
1. Tanks and Armoured Vehicles: The CM family of armoured personnel carriers has
been developed and will continue to be mass-produced. Research and developmentof communication command vehicles, artillery observation vehicles and ambulances
are on in progress.
2. A rtillery: XT86A1 howitzers, RT-2000 MLRS (multiple launch rocket system),
M32K1 tank guns and 20mm T82F cannons have been developed and test-fired.
Some of them are in the process of production.
3. Small Arms: 66mm T-85 launchers and 40mm T-85 howitzer launchers have beendeveloped and test-fired. They are scheduled to be produced.
4. Other Weapons: TC-85 20mm high-explosive ammunition, XTS-85 reflective sights,
night vision monitoring systems and soft bullet-proof vests have been developed andare in the process of production.
Since its establishment in 1946 in Nanjing, China, the CSF’s organisation went throughseveral restructuring processes. After the Nationalist Government came to Taiwan andordered it to be restored in 1950, it then became responsible for the production of militaryarms and equipment and provided joint back-up and general support for military services.
It has constantly enhanced its production skills and quality and improved military arms. In
joint logistics back-up, it has closely coordinated effective supply, repair and maintenanceand. In March 2002, the CSF was officially renamed as the ‘Combined Logistics Commandof the Ministry of National Defence’ (CLC). In December 2012, under a new wave ofdefence organisation reform during President Ma Ying-jeou’s era, the CLC was dismissed
again and merged into the Taiwanese Army Logistics Command. Although the CSF islegally no longer existent, its function of arms and equipment production remains intact in
the new organization.
Catching up with Military Technology: The Aerospace Industrial Development Corporation(AIDC)The Aerospace Industrial Development Corporation, previously known as the Aero Industry
Development Centre, was founded in 1969 under the authority of the Republic of China Air
Force and was later transferred to the Chung-Shan Institute of Science and Technology
17 Ibid.
18 Yen, P., ‘Taiwan: Diversification and Defense Trade Opps’, U.S. & Foreign Commercial Service and US

Department of State, 1999, https://fas.org/irp/world/taiwan/isar0020.htm.

13

FU-KUO LIU
under the management of the Ministry of National Defence in 1983. 19 Since its
establishment, the main task of the AIDC has been the research and development ofaerospace military technologies. Thus, in cooperation with international defence producers(e.g. Northrop and Lockheed), early production efforts included all kinds of military
aircraft: UH-1H helicopters, F5E/5F, T53, trainers and so on. After the United States
severed diplomatic relations with the ROC in 1979, the future supply of military equipment
for Taiwan’s defence was questionable and uncertain. Political barriers would wreck all
chances of military procurement for the next generation of advanced fighters, which
Taiwan’s security is highly dependent on. Through the enactment of the Taiwan Relations
Act, the US was obliged to sell arms and military equipment to strengthen Taiwan’s
defence capabilities; however, this support gradually waned:
Taiwan built nearly 300 Northrop F-5s under license from 1974 to 1986. From the early
1980’s, Taiwan expressed an interest in purchasing US fighter aircraft to replace its
obsolescent Northrop F-5 and Lockheed F-104 fighters. The United States, which wasinterested in improving relations with China, denied Taiwan’s request to purchase themore capable F-16, and blocked a subsequently proposed $1 billion sale of 100 F-20
Tigersharks in July 1982. The 1982 decision by the Reagan administration to bar exportof new fighters to Taiwan left technical assistance unrestricted. Taiwan decided to go italone to build the Indigenous Defence Fighter (IDF).20
In 1981, the ROC government ordered the AIDC to develop new fighters for upgrading
national defence. The project led to the successful development of the IDF (Indigenous
Defensive Fighter or F-CK-1) squadrons. The first squadron joined the ROC Air Force inDecember 1994.21
In 1996, in support of national aerospace development, the AIDC was reformed from amilitary establishment into a government-owned company under the authority of the
Ministry of Economic Affairs. As a market-oriented and successful commercial entity, the
AIDC worked towards commercialisation, privatisation and globalisation. According to the
new company objectives, ‘AIDC’s business strategy turned from products and services
which were previously solely for military applications into a well-balanced diversified mix
of both military and commercial of products and services’.22
Given the highly competitive and technologically demanding nature of the aerospaceindustry, the AIDC developed and proposed its privatisation plan to the government inearly 2013, and it was approved later the same year. The AIDC successfully consummatedits privatisation objectives through a public stock offering and was officially listed on the
Taiwan Stock Exchange on August 25th, 2014. In facing up to extreme competition in the
global market, the AIDC established an industrial alliance of joint effort with domestic
materials suppliers, equipment providers, manufacturers, logistic services and the banking
industry, as well as with academia integrating from upstream to downstream resources. The
objective of the alliance aims at establishing itself as a global Tier 1 supplier by upliftinggroup competitiveness and integrating related industries.23 With the establishment of the
19 Aerospace Industrial Development Corporation, 2019, https://www.aidc.com.tw/en/.
20 ‘Ching-kuo Indigenous Defense Fighter’, Military Analysis Network, 4 April 2000, https://fas.org/man/dod-

101/sys/ac/row/idf.htm.
21 Ibid.
22 Aerospace Industrial Development Corporation.
23 Ibid.

14

Taiwan’s Security Policy since the Cold War Era
NCSIST and the AIDC, the related aerospace industry supply chain was built and continues
to grow annually. The potential of the aerospace industry cannot be neglected over the
coming decades. Each year since 2016, more than US $1.5 billion in funds from the
Taiwanese government has been invested into domestic industries. Alongside strong
government funding, Taiwan’s international partners include Boeing, General Electric,
Pratt and Whitney, Airbus, Bombardier and so on. The number of international cooperative
projects continues to grow. The strengths of Taiwan’s aerospace industry supply chain
include design and production, systems integration, aircraft assembly and aviation
technological maintenance.
An important part of the AIDC’s success is its ability to match the right strategy to
optimal human resources. Constant support from the government over the past decades has
enabled the AIDC to acquire and maintain a talented human resource base dedicated to theaviation industry, and this has equipped the AIDC with expertise and capabilities in aircraft
systems integration, aircraft development, parts manufacturing, aircraft assembly, testingand verification. As a result, the AIDC continues its excellent record of achievement andhas outperformed its competitors in the Asia-Pacific region. In doing so it has earned itself
well deserved recognition and acceptance from the global aerospace community as avaluable supplier.
To ensure the AIDC’s technological advance and to satisfy Taiwan’s self-reliant defence
needs, the AIDC is actively pursuing development and expansion of local industry
capability and capacity. In compliance with the government’s policy of ‘domestic
production of jet trainers’, the NCSIST signed a commission agreement with the AIDC on
April 25, 2017, for the production of 66 advanced jet trainers, with which a domestic
outsourcing and industry assistance program was launched. Taiwan’s first prototype of an
indigenous advanced jet trainer made its public debut on September 23, 2019, following
the current President Tsai Ing-wen’s ‘design and build at home’ policy for militaryequipment. 24 The development of the AIDC, therefore, provides a clear snapshot of
Taiwan’s efforts to drive the indigenous defence industry from low technological equipment
to high technological weapons systems.
Toward a Leading Technology Provider: China (Taiwan) Shipbuilding Corporation
Taiwanese shipbuilding began in 1937 during the Japanese colonial period, when the
Mitsubishi Heavy Industries Corporation founded the Taiwan Dockyard Corporation. After
World War II, the ROC authorities established the Taiwan Machinery and Shipbuilding
Company by merging the existing Taiwan Dockyard Corporation with Taiwan Steel Works
and the Toko Kogyo Corporation. In 1948, the company split into two state-owned
companies, called the Taiwan Machinery Corporation and the Taiwan Shipbuilding
Corporation (TSBC). In the government’s ‘Ten Major Construction Projects’ announcement
delivered by Premier Chiang Ching-Kuo in November 1973, the China Shipbuilding
Corporation (CSBC) was listed as one of the national projects.25 It was then founded in1973 and reverted to being a government-owned corporation in 1977. The CSBC and the
TSBC merged in 1978 and became known as the China Shipbuilding Corporation until
2007. The CSBC was renamed by President Chen Shui-Bian as the Taiwan Shipbuilding
Corporation in Chinese, but the English name remains unchanged.
24 ‘Taiwan Unveils Prototype of Indigenous Advanced Jet Trainer’, Focus Taiwan, 24 September, 2019, http://
focustaiwan.tw/news/aipl/201909240008.aspx.
25 ‘Ten Major Construction Projects’, National Archives Administration, 2012, https://atc.archives.gov.tw/csbc/
en_boatsd1.aspx.

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FU-KUO LIU
The CSBC has built container ships, one-of-a-kind commercial ships and semisubmersible heavy-lift transport ships. Furthermore, it has built ships, submarines andadvanced naval weapons for the ROC Navy, patrol vessels for the ROC Coast Guard
Administration and research vessels for the Taiwan Ocean Research Institute. Most
recently, the CSBC is participating in the development of the first domestic TaiwaneseAutonomous Underwater Vehicle (AUV).
In 2018, the CSBC entered into an alliance with the Yang Ming Marine Transport
Corporation, Taiwan Navigation Co Ltd and the Taiwan International Ports Corporation, toprovide marine services to Taiwan’s burgeoning offshore wind power sector. The CSBC
has a joint venture with DEME Wind Engineering to offer wind-farm construction in East
Asia. In 2019, they were hired by Copenhagen Infrastructure Partners to transport andinstall wind turbines at two new wind farms off the Taiwanese coast. In July 2019, the
CSBC launched the CSBC No. 15, a barge designed to support the CSBC’s offshore windpower business. The barge has a loading capacity of 23,000 metric tons and a loading deck
bearing strength of 20 metric tons per square meter. Since 2016, the CSBC has been
contracted to build eight conventional attack submarines for the ROC Navy. The initialproject contract is for US $3.3 billion with projected procurement costs of US $15.9 billion
estimated for a fleet of eight submarines.26
After all updated developments, the CSBC has expanded its business beyond simple
construction of ships into related service sectors to provide strong support for thedevelopment of commercial vessel construction and repair capabilities, special vessel andmilitary vessel construction and repair capabilities, offshore industry, and land-based
machinery. The CSBC can now offer varieties of products and services, ‘such as theconstructions of merchant ships, naval vessels, official ships, and commercial services,large steel structures, machinery manufacturing, offshore engineering manufacturing,assembly, transportation, hoisting, commercial, and other core business projects’.27 Its
operating status today focuses on three main categories: the technology of merchant
shipbuilding and maintenance, the manufacturing and maintenance of naval and official
ships and the offshore wind power business. It is itself a successful example of an
indigenous defence industry.

VII Taiwan’s Successful Economic Development for Indigenous Defence
Industry
Through the development of three major indigenous defence institutions/companies
established by the government, Taiwan has gradually built a thriving indigenous defence
industry based on its successful economic strategies over the last seven decades. Only if
economic development was successful could technological development be advanced. The
economic process is therefore what the indigenous defence industry relied upon. Afterrelocating to Taiwan, the ROC government gradually managed to stabilise the domestic
political and social situation. It was all the more important for the government to adopt an
outward-looking development strategy, which encouraged fledgling domestic industries toconnect with the dynamism of international markets. Over the last seven decades, thesuccessful experience of economic development in Taiwan can be categorised into six
26 ‘Taiwan begins work on 1st indigenous submarine facility’.
27 ‘About CSBC’, Taiwan Shipbuilding Corporation, 2016, http://www.csbcnet.com.tw/English/About/About/

About.htm.

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Taiwan’s Security Policy since the Cold War Era
stages: 1950s – import substitution, 1960s – export-orientation, 1970s – export expansion,
1980s – technology-intensive economy, 1990s – high technology, 2000s – knowledgebased economy.
During the 1950s, the ROC’s main economic policy was to pursue stability and selfsufficiency. Top priority was then given to economic stabilisation and sufficient foodproduction: ‘[t]he major tasks were to effectively utilise US economic aid for development,
and to make use of tariffs and import controls in fostering the development of domestic
industry’. 28 The government focused on the development of labour-intensive imports,
substituting industries in order to ease dependence on imports and the demand for foreignexchange. Accompanied by an import substitution policy, a land reform program wasintroduced to promote social stability and shift the focus of large landowners to developing
private sector agricultural products.
In the 1960s, when Taiwan had managed to gradually accumulate a certain level ofindustrial base, the government began to encourage light industries to expand their export
scale beyond Taiwan. The government’s economic strategy emphasised encouraging
labour-intensive and export-oriented industries to target potential international markets. To
take greater advantage of global economic development and opportunities, the government
then introduced reforms in foreign exchange and taxation, increasing incentives forinvestors. At the same time, Taiwan’s first export processing zone was established in
Kaohsiung. Such policy flexibility made it into the international markets well. It resulted in
the rapid increase in Taiwan’s exports and the subsequent successful record of strong
economic growth.
The era of rapid export expansion stimulated stronger domestic demands for machinery,equipment and intermediate materials. Taiwan’s economic development and advancing
technology facilitated the economy to a higher level of basic and heavy industry
development, which in turn became the focus of economic strategy. It was around the1960s to 1970s, when the economy began taking-off, that the NCSIST, the AIDC and the
CSBC were established to combat the bleak international environment and national security
challenges for the ROC. As a response to the changing international economic environment,
the government decided to carry out the ‘Ten Major Development Projects’ to augment
railway, airport, port, electricity and other basic infrastructure, and vigorously promoted
the development of the petrochemical, steel and other capital-intensive import-substitution
intermediate industries. The main rationale was that the Major Development Projects‘enabled Taiwan to effectively reduce its reliance on the foreign supply of intermediate
products and to speedily upgrade its industrial structure’.29
In the 1980s, Taiwan’s economy entered into the stage of economic liberalisation andtechnology-intensive development. In spite of diplomatic difficulty in the international
community, Taiwan’s economy accumulated sufficient benefits in trade-promotion policies
and an increasing surplus in foreign trade. To cope with growing imbalances in theeconomy, the government introduced two guiding principles for further economic
development: economic liberalisation and internationalisation. Trying to utilise ample
capital resources, the government decided on the blunt approach of leaping to thedevelopment of capital- and technology-intensive industries, such as electronics,
28 ‘Economic Development ROC (Taiwan)’, Council for Economic Planned and Development, Executive Yuan,
ROC, 2012, https://ws.ndc.gov.tw/Download.ashx?u=LzAwMS9hZG1pbmlzdHJhdG9yLzEwL3JlbGZpbGUvNT
YwNy83MzIvMDAxNzUwOV8xLnBkZg%3D%3D&n=MjAxMl%2FntpPlu7rmnINf6Ie654Gj55m85bGV6Iux5
paH55Wr5YaKX%2BeAj%2BimvS5wZGY%3D&icon=.pdf.
29 Ibid.

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FU-KUO LIU
information and machinery, as part of the economic strategy of the 1980s. It has been
proven that this successful strategy has brought about not just economic achievement andwealth, but also advanced technology.
With the successful development of capital- and technology-intensive industries in the
1980s, Taiwan was ready to move on to the next stage of high technology. As the economy
developed, rising wages forced labour-intensive industries to move out of Taiwan,
relocating to mainland China and elsewhere. Boosted by high-quality human resources andcomprehensive industrial clusters, the structure of the economy underwent a new wave ofreadjustment focusing on the information technology industry. In 1993, it became theworld’s top producer of many IT products, supplying more than half of the global market
for monitors, motherboards and image scanners. In 1995, Taiwan’s IT industry became theworld’s third-biggest producer of IT hardware and played an indispensable role in the
global high-tech industry division of labour.
From 2000 onwards, Taiwan has made industrial remodeling and global linkage top
priorities in its economic strategy. The government unveiled ‘a new vision for pursuingknowledge-based, sustainable and just economic development, involving all-out investment
in human resources, R&D innovation, logistics channels and the living environment, and afocus on developing the semiconductor, image display, biotechnology and digital content
industries, with a view to raising the innovative capabilities of domestic industry andenhancing the people’s quality of life’.30 To overcome the impacts of the 2008 global
financial crisis, Taiwan’s economic strategy focused on infrastructure building, industrial
remodeling, inward investment and global linkage.
Taiwan’s experience of economic development over the last seven decades went fromstrengthening primary industry in agricultural sectors, labour-intensive industries andexport-oriented industries, to capital-intensive industries and technology-intensive
industries. Since 2000, it has taken the lead in the high technology sector. The entire
historical context of Taiwan’s economic development clearly indicates that the political andeconomic background supported the emergence of an indigenous defence industry.
Taiwan’s economic development and indigenous defence industry indicate three important
trends. Firstly, only strong economic development can economically and technologicallybuttress the defence industry at home. Taiwan’s advantageous economic development
provided sufficient resources to develop an indigenous defence industry.
Secondly, through the process of developing the indigenous defence industry, thegovernment has developed a very complicated civil-military industrial network at home
and abroad. Due to diplomatic difficulties in the international community, it has been muchharder for Taiwan to procure any advanced weapons and conduct any transfer of hightechnology. Likewise, Taiwan’s emerging indigenous defence industry will not be able toenter into the global arms market. As the scale of defence production is limited to the homemarket, defence production is relatively costly. Investment in the defence industry would
generate new jobs and stimulate economic growth. Because the ROC now faces acomprehensive security threat from China, the aging population, stagnant wages and ‘brain
drain’, pushing for development of a highly capable indigenous defence industry is
regarded overall as a good way of mitigating these challenges.31
Thirdly, it is always critical that high technology and industrial capacity developed by anindigenous defence industry or transferred from international partners be shared with
30 Ibid.
31 Ferry, T., ‘Growing Pains in Taiwan’s Defense Sector’, Taiwan Business Topics, 14 September 2019, https://

topics.amcham.com.tw/2019/11/taiwan-defense-sector/.

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Taiwan’s Security Policy since the Cold War Era
civilian sectors. Indigenous military programs do not only help transfer critical state-ofthe-art technology to civilian uses, but also stimulate the emergence of new industries andnew applications, including applications in aerospace, electronics, information technology
and even artificial intelligence.

VIII Concluding Remarks
The ROC has experienced significant social and political challenges. Despite this, it
continues to grow and transform regardless of the serious security threat from the PRC. Its
security policy has always focused on the threat from the Chinese communist regime. It
went from a ‘recover the mainland’ strategy in the 1950s, to an ‘offensive and defensive’
strategy in the 1960s, a ‘defensive defence’ strategy in the 1970s and finally to an ‘effective
deterrence, resolute defence’ strategy in 1980s and after. To survive defeat and disorder, theROC government managed to link itself closely to the US. When the US national interest
was favourable to Taiwan, US-Taiwan defence cooperation moved forward together. At
other times, the US would shift to a different focus according to its national interest anddecline to help defend Taiwan. After World War II, the development of the ROC was
closely aligned to the US national interest. Taiwan’s policy options limited were mostly inaccordance with US national interest, especially when it came to mainland China policy;
the US manages from behind the scenes and tries to make sure Taipei would not unilaterally
change the status quo in the Taiwan Strait in accordance with US interests. At the sametime, it remained unclear and uncertain what would happen if a conflict of national interest
with the US arose.
Throughout the Cold War era, the ROC’s national security was completely overshadowedby the enmity of the PRC. Even today, the ROC’s national security strategy
overwhelmingly addresses military threats from the People’s Liberation Army. Although
the US had over the years granted hardware and software to Taiwan to strengthen its
defence capabilities, Taiwan remained far from independent in defence modernisation andnational security. For Taiwan, a hard lesson learned from the changes in US policy in Asiaand other bilateral relations was that the US will only invest in countries it deems
strategically useful. As always, to receive military assistance from the US is to learn thatmilitary assistance comes with a political reckoning. The US uses the promise of military
assistance to leverage strategic development of allied countries.
The post-World War II economic development in Taiwan closely aligns with the politicalattempt to develop a strong indigenous defence industry, so that Taiwan might avoid
potential risk from changes in US policy. The challenging path Taiwan has followed indeveloping its indigenous defence industry demonstrates that there are three different ways
the US has administered military assistance to Taiwan. Firstly, the US offered military
assistance and arms sales to Taiwan. Secondly, the US was reluctant to sell advanced
weapons, but would help transfer critical technology and build advanced weapons in
Taiwan. Thirdly and finally, the US denied arms sales to Taiwan on political grounds.
Extreme uncertainty about national security has always been a big challenge for Taiwan.
The development of an indigenous defence industry has become critical and has gained
prevailing support in domestic politics. Taiwan’s development of the indigenous defence
industry began with three public institutions/organisations and has gradually connected
more than 200 SMEs at home. Over the past few decades, it has been built into a very
useful and promising defence industrial chain, which generally reflects what Taiwan’s

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economic development offers.
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About.htm.
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Appendix
Table 1. NCSIST Development of Weapons Systems32
Name of the systems

Development dateNotes of development

Aircraft
AIDC F-CK Indigenous
Defence Fighter

Introduction in January
Under the practice of US
1994
technology transfer andProduction 1990–2000 (A/ assistance to Taiwan’s defense
B models)
industry

AIDC AT-3 Tz-chiang
Advanced Trainer

Produced 1984-1989

AIDC T-5 Brave Eagle

The project was announced Jet trainer/lead-in trainer
to begin in 2017. The
developed in partnership with
development and
AIDC and the ROC Air Force.
production is to be
Based on the F-CK-1 B/D.
undertaken by apartnership of AIDC andthe NCSIST with delivery
scheduled to begin in
2026.

NCSIST Albatross Tactical
Unmanned Aircraft System

A total of 62 aircraft were
manufactured by the AIDC incollaboration with American
aircraft manufacturer Northrop

The Albatross Tactical UAS were
designed in composite material
structures and modular system.

CSIST Chung Shyang II
Unmanned Aircraft System
NCSIST Tengyun (TengUnveiled in 2015
Yun or Cloud Rider)
Unmanned Aircraft System
Cardinal Mini Unmanned
Aircraft System
NCSIST Chien Hsiang

2019-2024

In 2019, the Taiwan Air Force’s
Air Defense and Missile
Command announced a five year,
NT$80b (US$2.54b) project tobuild up a full force of antiradiation UAVs

32 The main development of indigenous defence industry can be quoted on historical development of the
NCSIST. From low level of technological weapons to advanced weapons, the table reflects the progress of the
ROC independent defence industry. “Defence system,” http://www.ncsist.org.tw/eng/csistdup/products/catelogs_
Middle.aspx?catelog_Id=8; “Aviation systems,” http://www.ncsist.org.tw/eng/csistdup/products/products.
aspx?catelog_Id=9; “electronic systems,” http://www.ncsist.org.tw/eng/csistdup/products/catelogs_Middle.
aspx?catelog_Id=10

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Taiwan’s Security Policy since the Cold War Era
Missile Systems
Hsiung Feng I (HF-1)
Hsiung Feng II (HF-2)33

Surface-launched subsonic antiship missile
Started the development in Surface-launched subsonic anti1983 and deployed toship missile with limited air-toR.O.C NAVY in 1990.
ground missile capabilities
In 2007 the improved
version of HF II BLOCKII deployed to Kwang Hua
6 FAC (Fast Attack Craft).

Hsiung Feng IIE (HF-2E)

Surface-launched long-range
cruise missile system.

Hsiung Feng III (HF-3)34

Started the critical
Surface-launched supersonictechnology research inanti-ship missile.
1994 and proceeded thefirst flight test in 1997.
In 2004, NCSIST finishedthe development test andevaluation of HF III
missile and then the R.O.C
Navy finished the initial
operational test andevaluation in 2005.

Sky Bow (TK)

Air defence weapon system,
consisting of TK-1, TK-2 andTK-3 systems

Sky Sword I (TC-1)

Radar-guided medium-range
air-to-air missile

Road mobile SHORAD
systemRadar-guided medium-range
air-to-air missile.

Sea Oryx: Sea-based point
defence system

Sea-based point defence system
built around the TC-1.

Sky Sword II (TC-2)

Radar-guided medium-range
air-to-air missile.

Sky Horsedeveloped in the 1970’s

Short-range ballistic missile
systemSky Spear

Short-range ballistic missile
system derived from the TK-2.

Yun Fengsupersonic surface-to-surface
cruise missile.

33 “Hsiung Feng II,” http://www.ncsist.org.tw/eng/csistdup/products/product.aspx?product_Id=238&catalog=30
34 “Hsiung Feng III,” http://www.ncsist.org.tw/eng/csistdup/products/product.aspx?product_Id=10&catalog=30

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FU-KUO LIU
Wan Chien

Air-ground cruise missile

Other Weapons Systems
Coastal Defence Rocket
Launcher.
Thunderbolt-2000 (LT2000)

Locally-developed MLRS

Kung Feng 6 (KF 6)

Locally-developed MLRS.

Kestrel (Rocket Launcher) Development began in
2008. The Kestrel enteredservice with the ROCMC
in 2015.

Disposable rocket launcher firing
HEAT and HESH projectiles.
Development began in 2008. The
Kestrel entered service with the
ROCMC in 2015. The Kestrel
platform is being used as astarting point for thedevelopment of an anti-tankguided missile system.

XTR-101/102

Exhibited for the first time Automatic close-defence within 2015.
20mm weapon mounts.
Prototypes were demonstrated in
September 2013.

CS/MPQ-90 Bee Eye

Bistatic Radar System

Short- to medium-range
multifunction AESA radar to
support SHORAD batteries.
Intended to have a naval role as
well.
Two systems enteredservice in 2018 with mass
production to begin in
2020.

Bistatic radar system. Twosystems entered service in 2018with mass production to begin in2020 if they behave favourably
in the field.

AV2 Long-Range Chaff
RocketLong-Range Chaff Rocket: Chaff(countermeasure) rocket for ship
self-defence.

CS/MPQ-90 Bee Eye

Short- to medium-range
multifunction AESA radar to
support SHORAD batteries.
Intended to have a naval role as
well.

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Taiwan’s Security Policy since the Cold War Era
2.75in Rocket

2.75 inch aerial rocket for use
aboard AH-64, OH-58D, F-5E/F,
F-16, P-3 Orion and so on. There
are two variants currently
available: Mk4 and Mk66.

CAPTOR Mine

Designated No. 1 Wan Xiang
CAPTOR Mine. CAPTOR mines
contain a torpedo and a targetingsystem.

Bottom Mine

Designated No. 2 Wan Xiang
Bottom Mine. A remotecontrolled or passive mine
designed to sit on the bottom of
the sea.

Moored MineA remote or automatic mine
designed to be moored to thebottom of the sea and float in thecurrent.

Civilian Systems
Sensor System for the
Resource Prospector Lunar
Rover Mission.
SG100 Cloud Computer
It was launched to thefor the International Space space station in 2017.
StationDesigned and manufactured incollaboration with Academia
Sinica and National Central
University under contract for
NASA.

High Speed Rail Simulator

Developed with Taiwan High
Speed Rail. Based on aircraft
simulator technology, the system
can simulate natural disasters
such as typhoons andearthquakes.

Civilian Air Traffic
Control RadarNCSIST has partnered with the
British firm Easat Radar Systems
to pursue dual use projects using
NCSIST’s proprietary radar
technology.

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