Taiwan Defence and Security Report 2016
BMI View: With President-elect Tsai Ing-wen's independence-leaning administration taking office in May2016, relations with mainland China have cooled. In comparison to China's People's Liberation Army,Taiwan's military is small in size, and lacks technologically advanced equipment. Compounded by our viewthat the US is increasingly unlikely to come to Taiwan's aid in the event of military conflict with themainland, domestic demand for modern equipment is significant and rising, particularly for products suchas advanced multi-role combat aircraft, submarines and air defence systems. Taiwan's armed forces arebeing restructured and professionalised, which eventually will mean that a greater share of the defencebudget can be directed towards R&D and new procurement, rather than personnel costs. The domesticdefence sector boasts design and development capabilities in a range of segments, however, moretechnologically advanced military equipment still needs to be imported from the US. Apart from the US,most countries avoid defence exports to, and industry collaboration with Taiwan, in fear of the potentialloss of Chinese goodwill. Exports are similarly affected by the island's ambiguous sovereignty status.
In January 2016, Taiwan's independence-leaning opposition leader Tsai Ing-wen won presidentialelections, with her Democratic Progressive Party in majority in the legislature for the first time in partyhistory - ousting the ruling Kuomintang (KMT). Tsai has stated that she will maintain the 'status quo' inregards to the 1992 'One China' consensus.
In December 2015, in a move that was met with condemnation by Beijing, the Obama administrationformally authorised a potential USD1.83bn arms sale package for Taiwan. The package will include:AAV-7 amphibious assault vehicles, Perry-class frigates, air defence systems, TOW 2B missiles, ITASlaunchers, Javelin antitank missiles and communication systems. The principal contractors of these itemsare Lockheed Martin and Raytheon.
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