TAIWAN'S MODEST DEFENSE INDUSTRIES PROGRAM
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Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP86T00590R000100110003-0
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RIPPUB
Original Classification:
S
Document Page Count:
16
Document Creation Date:
December 22, 2016
Document Release Date:
July 14, 2010
Sequence Number:
3
Case Number:
Publication Date:
February 1, 1983
Content Type:
REPORT
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Directorate of Secret
Intelligence
Industries Program
Taiwan's Modest Defense
Secret
EA 85-10033
February 1985
Copy 2 6 2
NGA Review Completed
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Directorate of Secret
Intelligence
Industries Program
Taiwan's Modest Defense
Office of East Asian Ana ysis.
directed to the Chief, China Division, OEA,
Secret
EA 85-10033
February 1985
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Secret
Industries Program
Summary Since the United States recognized China in 1979, Taiwan has sought to
Information available decrease its dependency on the United States as a source of arms by
as of I February 1985 promoting its own defense industries and diversifying its military pur-
was used in this report.
chases. Although the Taiwan media have trumpeted the success of this
policy to allay domestic concern over "overreliance" on the United States,
our analysis indicates the results have been only modest.
Taiwan has developed and produced a number of weapon systems, but all
are heavily dependent on foreign-mainly US-technology and key com-
ponents. Weapon systems now in the planning stage, such as Taiwan's next
generation fighter aircraft, a surface-to-air missile, and a surface-to-
surface cruise missile will be equally dependent on outside assistance.
To boost arms production substantially, the government would have to
divert funds from its economic modernization program-something it is
not prepared to do. Although the defense budget is the largest item in the
national budget, it has declined in recent years because Taiwan's economic
policy emphasizes education, research and development, and economic
reconstruction projects. We believe that Taiwan will continue to proceed
prudently, anxious to avoid the high economic costs that a full-scale arms
program would entail.
Taiwan's effort to diversify military purchases has largely failed. Most
nations interested in selling to Taiwan are constrained bv their fear of
economic and political retaliation from Beijing
In the final analysis, we doubt whether Taiwan is intent on becoming
totally self-sufficient in arms production. Not only would the economic
costs be too high, but we believe the senior leadership wants to maintain a
close arms relationship with the United States. Taipei values such deals, es-
pecially when they occur against the backdrop of protest from Beijing, as
tangible demonstrations of US support. In addition, the leadership believes
that it needs the sales to demonstrate that it can manage relations with
Washington successfully.
Thus, although we expect Taiwan eventually to develop increasing self-
sufficiency in some areas-notably small naval combatants and jet trainer
aircraft-we do not believe such progress will reduce Taiwan's interest in
acquiring US weaponry and weapons technology. Its leaders regard that
connection as too critical politically for the island's long-term security.
Secret
EA 85-10033
February 1985
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Taiwan: Major Defense Production Facilities
Chin-men Tao
(Quemoy)
~.~ a Tung-yin Tao
Liang Tao
O Pei-kan-t'ang Tao
%a-tsu Tao
Pai-ch'uan Lieh-tao
Taiwan Strait
jMa-kung
P'eng-hu Ch'un-tao r_i
(Pescadores) `Shipyard
Philippine
Sea
Shipyard, ;Tso-y hg I/ vLu Tao
r
0 25 50 Kilometers
25 50 Miles
IL
Shipyard
East China
Sea
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Secret
. Taiwan's" Modest Defense
Industries Program
Development of the Defense Industries
Following US recognition of the government in Bei-
jing in 1979 and the subsequent US promise to reduce
the quantity and quality of the arms it sold to Taiwan,
Taipei announced a drive to achieve self-sufficiency in
weapons production. In the interim, the military
leadership said it would diversify its arms purchases
away from the United States.
To expedite production of a wide variety of weapons
and equipment, Taipei in 1979 established eight
research and development groups.' Made up of repre-
sentatives from the armed services, the Chung-shan
Institute of Science and Technology (CIST), and the
Industrial Development Bureau of the Ministry of
Economic Affairs, the groups were directed to estab-
lish long- and short-range production goals and moni-
tor weapons development programs. At the same time,
Taipei began increasing its national defense budget
until it peaked at $3.6 billion in 1983 or 42 percent of
the total budget.
In 1982 Taiwan for the first time encouraged coopera-
tion between the civilian technical and scientific
community and the military community to strengthen
its capabilities to develop and produce sophisticated
military equipment. The joint efforts concentrate on
electronics, computers, material sciences, and infor-
mation processing. Civilian research centers, such as
the Hsin-chu Science and Industry Park, the Institute
of Information Industry, and the Industrial Technol-
ogy Research Institute, provide technical expertise to
the defense industries.
Taiwan also funds
private companies and civilian research centers to
acquire from foreign firms components and technol-
ogy that are suitable for the manufacture of military
hardware. In addition, Taipei has announced that the
military will help colleges and universities set up
research centers to promote defense technology
' Each of the research and development groups addresses a
particular category of weapons and equipment: tanks and armored
vehicles; warships; aircraft; light weapons, artillery, and ammuni-
tion; rockets and missiles; radar, communications equipment, and
electronic instruments; components and spare parts; and raw
Control of the Defense Industry
The Ministry of National Defense controls the de-
fense industries through several subordinate organi-
zations and government-owned facilities:
? The Chung-shan Institute of Science and Technol-
ogy is responsible for the research and development 25X1
of modern weapons. The institute consists of five
departments: nuclear, aerospace (the Aero Industry
Development Center), missile, chemical, and
electronics.
? Shipyards at Kao-hsiung, Chi-lung, Tso-ying, and
Ma-kung are responsible for Taiwan's naval ship-
building activities. The Kao-hsiung shipyard is one
of the largest, most modern shipyards in the world
and the second largest in Asia.
? The Combined Services Force, which is on the same
command level as the three armed services, oper- 25X1
ates several arsenals that produce a variety of
weapons, ammunition, vehicles, and communica-
tions equipment
Producing Weapons-But With
Foreign Assistance
The Taiwan military believes its most critical needs
are the air and naval weapons that would be essential
to achieving air superiority over the Taiwan Strait or
countering a naval blockade in any conflict with
China. Thus Taiwan's highest priority for its defense
industries has been the development of a high-
performance jet fighter. Other high priorities have
included developing long-range standoff missile sys-
tems for its naval and land forces and building new
warships.
Progress toward developing those weapon systems,
however, has been slow. Since the late 19.70s, Taiwan
has produced antiship and antitank missile systems,
missile attack boats, patrol ships, jet trainer aircraft,
multiple rocket launchers, and large-caliber artillery.
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Total
1.7
1.8
2.5
3.5
3.6
3.2
3.4
Share of national budget (percent)
39.1
34.0
35.0
41.6
42.1
40.9
37.8
Share of GDP (percent)
5.3
4.5
5.6
7.6
7.3
5.9 a
5.8 a
In addition, Taiwan is working on other weapon
systems that could enter production in the late 1980s,
including a surface-to-air missile and a surface-to-
surface cruise missile. But the development or produc-
tion of the more advanced systems has been delayed
because of serious technical problems. Moreover, de-
spite the establishment of the indigenous research
groups, all of these weapon systems remain heavily
dependent on foreign-mainly US-technology and
key components. And weapon systems now in the
planning stage will be equally dependent on outside
assistance.'
are interested in buying
arms from Taiwan, but so far no major agreements
have been signed.
We believe several factors prevent Taiwan from gain-
ing a larger share of the lucrative international arms
market:
? Taiwan lacks the technology to compete with items
from more advanced countries.
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Arms Exports-Still Too Small
Taiwan has not been able to export enough of its arms
production to generate the revenues needed to rapidly
upgrade its defense industries and lower the costs of
indigenous production. Despite the 1979 reversal of a
longstanding policy that limited military exports to
small arms and ammunition in favor of a more
aggressive arms export policy, Taiwan has sold only
$100 million worth of arms since 1979.'
major purchasers include Iran
for arms and ammunition worth $38 million; the
Philippines for howitzers, ammunition, and associated
equipment worth $18 million; and Argentina for arms
see appendixes A through D.
' Taiwan's total arms sales from 1970 to 1978 were about $29
million; mostly of mortars, small arms, ammunition, and logistic
? Taiwan is vulnerable to political and economic
pressure from a few countries. For example, Saudi
Arabia, Taiwan's major oil supplier, pressed Taiwan
on Iraq's behalf to stop selling arms and equipment
to Iran.
? Some military equipment is of US design, and resale
to other countries is restricted.
Nonetheless, some growth in Taiwan's share of the
international arms market is likely. Programs to
produce more modern weapons such as antiship mis-
siles, trainer aircraft, self-propelled guns, and missile
boats will increase Taiwan's image as a source of
weapons, especially among Third World nations. Tai-
pei probably will concentrate on the market shared by
arms suppliers to the Third World such as Brazil,
South Korea, and the East European countries.
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Similarly, Taiwan's search for alternate sources of
arms since 1979 has achieved only limited success.
Because most nations remain wary of Chinese retalia-
tion, Taiwan has only been able to make one-time
purchases of finished products or technology and has
not acquired such items as sophisticated fighter air-
craft that require long-term support in spare parts:
? Taipei signed a $138 million arms deal in 1979 with
Switzerland for 35-mm Oerlikon antiaircraft artil-
lery (AAA) guns and the Skyguard fire-control
system, In 1982
Taiwan also bought a $70-million maintenance fa-
cility for the guns. Last year, however, the Swiss
Government, citing legal grounds, rejected requests
from Swiss firms to sell trainer aircraft and armored
vehicles to Taiwan.
? Taiwan purchased Bofors 40-mm AAA guns from
Sweden for $36 million in 1979 to improve the
Navy's air defense capability. Taiwan used Singa-
pore as an intermediary, because Sweden would not
sell the weapons directly to Taiwan.
? Taiwan also used Singapore as an intermediary for
the purchase of 76-mm AAA guns and ammunition
from Italy in 1979,
More recently, Rome approved negotiations
with Taipei for the sale of antisubmarine warfare
helicopters and trainer aircraft, but it insisted that
any sale be made through an intermediary to pre-
vent reaction from Beijing.
? In 1980 the Netherlands agreed to build two diesel-
powered submarines for Taiwan, and the Chinese
recalled their Ambassador to the Netherlands and
reduced diplomatic relations to the charge d'affaires
level in protest. As a result, the Dutch in 1983
refused to build additional submarines for Taiwan
because they feared that China would break
relations.
? West Germany in 1983 agreed to sell through the
United States 66 used F-104s to Taiwan. Although
the sale drew only a pro forma protest from China,
West Germany last year rejected Taiwan's request
Even if Taipei were able to assure a steady supply of
equipment and technology from non-US sources, it
would still be a long way from self-sufficiency in arms
production. US observers report that Taiwan is not
capable of fully absorbing and exploiting technology
transfers and key components in major development
projects because there is no corps of scientists and
engineers trained in system integration. The resulting
trial-and-error method and interim fixes waste valu-
able resources and frustrate military leaders. For
example, naval officials complain about the continu-
ous problems with the Hsiung Feng antiship missile
system, which has already undergone years of testing.
We believe that several other factors prevent Taiwan
from achieving a major degree of self-sufficiency in
arms production:
? Taiwan long ignored the scientific technologies and
skills needed for the research and development of
modern weapons because it relied on the United
States to arm its military forces.
? The number of engineers and technicians skilled in
the design, research, and development of sophisti-
cated weapon systems is limited. Private and gov-
ernment industry face stiff competition from foreign
firms that offer more attractive employment oppor-
tunities for Taiwan's pool of scientific and technical
talent.
? The island's defense industries are almost totally
dependent on imports of raw materials from the
United States and other countries. The inconsisten-
cy of raw material supplies has caused factories to
operate far below full capacity.
? Taiwan's commercial industry lacks the means to
produce sufficient quantities of machinery required
for large-scale arms production. Despite government
incentives, some commercial companies are reluc-
tant to commit large amounts of capital until they
have gained experience in producing weapons for
the government or foreign markets.
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Implications for the United States
We believe Taipei's leaders will continue to seek
access to US logistic and weapon systems indefinitely
for both economic and political reasons. The costs of
developing the capability to produce all of its own
weapons, or of switching to other suppliers for major
weapon systems-even if other suppliers could be
found-would be almost prohibitive. Moreover, it
would require Taipei to divert funds from its econom-
ic modernization program-something it is not pre-
pared to do. In fact, after an initial sharp increase in
the defense budget after derecognition, planned de-
fense spending since 1982 has been declining sharply
as a percentage of GDP and as a share of the national
budget.
At best, it will take Taiwan 10 to 15 years to become
self-sufficient in some key weapon systems, design
technology, and military components. Meanwhile, it
will have to seek foreign help-primarily from the
United States-for the technology and designs for
such sophisticated weapons as new fighters and mis-
sile systems and for equipment essential to maintain-
ing the island's crucial air and naval defenses and
sustaining military morale.
In addition to the fiscal.and technological limitations,
Taipei-in our view-is unwilling to develop an indig-
enous weapons production capability because it values
acquisition of US arms as tangible displays of US
political support. Since January 1979, when the Unit-
ed States broke diplomatic relations with Taipei and
abrogated the mutual defense treaty, senior Taiwan
leaders have also highlighted the sales domestically to
demonstrate their ability to maintain the US link,
which most on the island view as crucial to Taiwan's
security. This is particularly true when the sales occur
against the backdrop of protests from Beijing
During 1980-81, Taipei used news of such sales-
sometimes falsified-to try to disrupt US-Chinese
relations. Although this practice has not been em-
ployed recently, US arms sales will probably remain
the key irritant in these relations for the foreseeable
future.
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Appendix A
Taiwan's Missile Industry
Taiwan began to develop a modest missile industry in
the mid-1970s, soon after purchasing Gabriel surface-
to-surface antiship missiles from Israel. Taiwan ini-
tially equipped a few ships with Gabriels, but Israel's
price increases led Taipei to develop and produce its
own version of the missile, called the Hsiung Feng
(Drone Bee). The Hsiung Feng can be launched from
ship or shore and has a range of about 36 kilometers
(km) and a high-explosive warhead of 70 kilograms.
serious early prob-
lems with the Hsiung Feng fire-control and radar
system have been solved, and Taiwan will start pro-
ducing the missile this year. The Hsiung Feng will
initially be deployed on Taiwan's destroyers and
missile attack boats.
In the late 1970s, Taiwan developed a short-range
ballistic missile, designated the Ching Feng, as a pilot
project to gain the skills and techniques necessary for
the development of a longer range missile. The Ching
Feng was a single-stage missile designed to carry a
450-kilogram warhead a distance of 110 km. The
short range of the missile, however, limited its land-
based deployment to the offshore islands of Quemoy
and Ma-tsu. Taiwan displayed the missile publicly in
1981, but canceled production the next year because of
continuing problems with the solid-propellant and the
guidance system,
Taiwan is converting the US Beech Model 1089
target drone to use as a surface-to-surface cruise
missile for antishipping and antiradar applications.
The cruise missile reportedly will replace the land and
ship-based Gabriel and Hsiung Feng antiship missiles
because it has longer range and better accuracy. The
missile has been successfully tested,
The Chung-shan Institute of Science and Technology
(CIST) started working in 1981 on the follow-on
multistage version of the Ching Feng that would be
capable of striking coastal airfields and embarkation
points in China. Press reports indicate that the missile
will have a range of 960 km, but
the range is closer to 70 m.
but Taiwan made wing modifica-
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section and increase the missile's speec 25X1
flight tests con-25X1
tinue at a missile test range, and we believe the
missile could be deployed in two or three years.
We believe, however, that the new missile probably
will not be successfully developed during this decade
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ing a medium altitude surface-to-air missile (SAM) to ""-
fulfill its air defense needs in the 1990s. The two- 25X1
stage missile, which is called the Tien-Kung, was
without substantial foreign assistance.
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successfully launched during its last four.tests, but Taiwan is producing small numbers of an antitank
CIST expects development to continue for at-least guided missile based on the Soviet Sagger, which 25X1
four more years. Taiwan obtained from South Vietnam during the
1970s. The Taiwan Army is mounting the missile 25X1
system on jeeps and armored personnel carriers. We
believe that Taiwan is only producing small numbers
of the missiles because it has a low priority and dated 25X1
design.
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Appendix B
Taiwan's Aircraft Industry
The programs to coproduce US jet fighters and
helicopters during the 1970s broadened the techno-
logical base of Taiwan's aircraft industry and provid-
ed the Aero Industry Development Center (AIDC)
with the experience required to design and build
aircraft. AIDC has a research lab, a manufacturing
facility, and an engine plant, but it still lacks the
technology and manufacturing capacity to produce
advanced jet engines and avionics for jet fighters.
Since 1979, AIDC has:
? Accelerated development of Taiwan's jet trainer
and jet fighter aircraft.
? Constructed a high-velocity wind tunnel for aircraft
research and development.
? Constructed a defense plant for the manufacture of
electronic components used in avionics.
? Provided technical assistance to private industry in
the manufacture of aircraft components.
A domestically developed jet trainer, the A T-3, was
unveiled last year, but it is not in series production.
We believe that Taiwan is making modifications to
the aircraft, because only five aircraft have been built
and they have not been deployed. The twin-seat
aircraft is powered by two Garrett turbofan engines
and is designed to replace Taiwan's aging US-built
trainers. The AT-3 can be used in a combat role
because it is capable of carrying an assortment of
missiles, bombs, rockets, and gun pods. Taiwan re-
portedly plans to build at least 60 of the aircraft and
hopes eventually to export it to Southeast Asian and
Latin American countries
ing a new jet fighter, designated XF-6, to replace its
F-5E fighters.
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Appendix C
Taiwan's Naval
Shipbuilding Industry
Taiwan has the modern equipment and skilled person-
nel to build warships, as long as foreign design
technology and technical assistance are available.
Taiwan started constructing large naval ships in the
mid-1970s by concluding a contract with a US firm,
Tacoma Boat-Building Company, to coproduce two
multimission patrol ships (PSMM). The all-
aluminum PSMM has a full load displacement of 260
metric tons, a maximum speed of 40 knots, and is
powered by a mix of diesel and gas-turbine engines.
Tacoma built the first PSMM in the United States
and delivered it-without weapon systems-to Tai-
wan in 1978. Taiwan completed construction of the
second ship in 1981 with materials and technical
assistance provided by Tacoma. The Taiwan Navy
equipped the ships with four Israeli Gabriel-II anti-
ship missiles, a Swedish 40-mm AAA gun, and a
sophisticated sensor system for surface and antiair-
craft warfare.
After the United States severed relations with Tai-
wan, military leaders outlined plans to design and
produce in Taiwan a second generation of naval ships
to replace its aging fleet,
? Taiwan signed a contract in 1982 with the British-
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LDAI
owned, Singapore-based firm of Vosper for the
construction of 27 100-ft patrol boats,
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Twenty-five of the
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boats are being built under license in Taiwan and
will be armed with 40-mm guns. Taiwan probably
will use the patrol boats for coastal defense and
fisheries enforcement.
? Taiwan has designed a 1,200-ton corvette powered
by indigenously made diesel engines, according to
press reports. The corvette
will carry antiship missiles, AAA guns, and a
helicopter equipped for antisubmarine warfare. Tai-
wan reportedly plans to launch the first ship by
1987.
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indigenously designed and produced at least two
transport ships since 1981. The ships have no
weapon system, but platforms are mounted on board
to carry AAA weapons. The ships will improve the
Navy's capability to resupply and reinforce the
offshore islands during hostilities.
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Appendix D
Taiwan's Ground
Armaments Industry
Taiwan has developed and produced armored vehicles,
artillery pieces, multiple rocket launchers, mortars,
and rifles, although these items are based on foreign
weapon systems or use foreign components. In addi-
tion, Taiwan produces under licensing arrangements,
a variety of small arms, ammunition, and military
vehicles that are copies of older, US-designed systems.
Taiwan also has produced several other weapon sys-
tems for the ground forces using technical assistance
and key components from other countries, including:
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Press reports in 1981 indicated that Taiwan indige-
nously developed a new light tank called the M-64.
The new tank, however, apparently is a modification
of the US M-41 light tank already in Taiwan's
inventory. According to the
press, Taiwan added a layer of extra-hard alloy steel
armor plate to the tank for improved armor protection
and installed a diesel engine and a new transmission
obtained from the United States. Taiwan reportedly
has equipped the tank with indigenously produced
systems including a 76-mm main gun, an infrared
night vision system, a laser rangefinder, and an
electronic communications system.
Taiwan has developed and produced an armored
infantry fighting vehicle (AIFV), which is similar to
the US M-113 armored personnel carrier. The AIFV
reportedly has an added layer of steel armor, an
amphibious capability, and is protected against chem-
ical and biological agents. According to press reports,
the AIFV is powered by a British-designed diesel
engine coupled to a transmission system developed by
Taiwan. The vehicles will supplement the M-113s
already in the inventory.
? An extended range self-propelled (SP) 155-mm gun
that is based on a South African-made artillery
piece, The gun
reportedly has a range of 45 km. Taiwan purchased
gun barrels and forging equipment for the gun E:::
and it developed
extended range ammunition for the gun with techni-
cal assistance from
? A short-barreled SP 155-mm howitzer that mounts
a domestically produced version of a US howitzer on
a modified US tracked chassis.
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? A 155-mm towed howitzer, which Taiwan unveiled
in 1981, that appears to be a copy of the Israeli
Soltham M-68 155-mm howitzer. After solving 25X1
technical problems with the gun's barrel, Taiwan
started deploying the weapon last year,
? The Kung Feng 4, which is a 40-tube 126-mm
multiple rocket launcher that can be towed or
mounted on a US M-113 APC. Taiwan began
producing the weapon system in 1981 with key
components from the United States. A 16-tube
version of the system is being installed on Taiwan's
destroyers.
? The Kung Feng 6, a 45-tube 117-mm multiple
rocket launcher made with US components that can
be mounted on a truck or a tank chassis. According
to press reports, it has an impact area of 30,000
square meters.
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