Taiwan’s New Special Defense Budget Emphasizes Indigenous Anti-Ship Weapons Production

Taiwan’s New Special Defense Budget Emphasizes Indigenous Anti-Ship Weapons Production

Taiwan’s New Special Defense Budget Emphasizes Indigenous Anti-Ship Weapons Production

On October 5, Taiwan’s Ministry of National Defense (MND, 國防部) formally presented the Legislative Yuan (LY, 立法院) with a proposed new special defense allocation request. A joint meeting of the LY’s Foreign Affairs and Defense Committee (外交及國防委員會) and Finance Committee (財政委員會) officially received the “Sea-Air Combat Power Improvement Plan Purchase Special Regulations” (海空戰力提升計畫採購特別條例) (hereafter “special budget”). The proposed budget increase is significant in its size: at NTD $240 billion (the rough equivalent of USD $8.6 billion), it is just over half the size of the entire projected NTD $471.7 billion (USD $16.9 billion) defense budget for 2022.

Speaking at the same time that the special budget was unveiled—with comments no doubt intended to support its passage—Defense Minister Chiu Kuo-cheng (邱國正) stated that the situation across the Taiwan Strait was “the most serious” that he had seen in his 40 years of military experience. He further stated that the People’s Republic of China (PRC) possessed the capability to invade Taiwan, and that it would be capable of mounting a “full scale” invasion within four years. Chiu also highlighted an MND report indicating that the PRC could achieve the effective ability to blockade the Taiwan Strait within the same 2025 timeframe—citing, among other developments, rapid production of the PRC’s Type-075 amphibious assault ship.

Although the proposed special budget is still under review, the control of both the presidency and the LY by the Democratic Progressive Party (DPP, 民進黨) suggests that the budget is very likely to be approved. The proposed supplemental budget reveals a great deal about how MND planners see the military threat from the PRC, and how they evaluate the resource requirements of the Republic of China (ROC) armed forces in terms of mounting an effective deterrent (or potentially, kinetic) response. The particular provisions of this budget are worthy of a more detailed look.

Contents of the Special Defense Budget

Per reporting by Taiwan’s Central News Agency and SETN Media, the special budget is intended to cover 8 acquisition programs over the next five years, from 2022 to 2026. The single most striking aspect of the special budget is its emphasis on anti-ship and surface warfare systems: the two largest components of the budget (see immediately below) are both focused upon this warfare area, and together represent approximately 62 percent of the overall expenditure. Secondary areas of emphasis are focused on surface-to-air missiles (SAMs) for anti-aircraft and anti-ballistic missile roles, and the further acquisition of ground attack systems. A breakdown of the specific budget programs follows below.

Anti-Ship and Surface Warfare Systems

  • The special budget allocates NTD $79.7 billion (USD $2.86 billion, 33 percent of the overall special budget) for the further development and acquisition of anti-ship cruise missile (ASCM) systems. This funding is to be focused on increased production of the Hsiung-Feng (HF, 雄風) II and III systems, which are indigenously-designed ASCMs that can be mounted on both naval vessels and land-based mobile launchers. The program includes a projected first phase of production, budgeted for NTD $35.6 billion (USD $1.27 billion), focused on ramped-up manufacturing of HF-IIs and HF-IIIs. A second phase, budgeted for NTD $44.1 billion (USD $1.58 billion), would commence in 2023 and focus on the production of a new, extended-range variant of the HF-III (增程型雄三).
  • The special budget would provide NTD $69.6 billion (USD $2.5 billion, 29 percent overall) in additional funding for Taiwan’s indigenous military shipbuilding programs. This funding is to be used primarily for the construction of additional Tuo-Chiang (沱江) guided missile patrol craft (PPG). These vessels are small corvettes, with a catamaran hull design and stealth features including waterjet propulsion and a lower radar cross-section (RCS) profile. The Tuo-Chiang class PGGs are intended to serve primarily as more mobile and survivable surface combatants capable of targeting larger vessels with their HF-II/III ASCMs. Taiwan’s Lung Teh Shipbuilding (龍德造船) reportedly received a contract in 2018 to build 11 of the vessels by the end of 2026 (with two of these ships already commissioned into service with the ROC Navy), at a reported cost of NTD $2.2 billion each. The special budget allocation could potentially allow for the production of even more such vessels, although no projected number of ships associated with the special budget has been made public.
  • A much smaller portion of the budget, roughly 1 percent overall, has been designated for upgrades to command-and-control systems on ROC Navy and Coast Guard vessels.

Anti-Aircraft Systems

  • Approximately NTD $33.6 billion (USD $1.2 billion, 14 percent of the budget) is allocated for further acquisition of Tien Kung-III (TK-3, 天弓三型) SAM systems. The TK-3, or “Skybow-3,” is a land-based SAM employed alongside the US-produced Patriot Advanced Capability-3 (PAC-3) missile system to perform both anti-aircraft and anti-ballistic missile roles.
  • Approximately NTD $9.6 billion (USD $340 million, 4 percent overall) is allocated for further acquisitions of the “Battlefield Air Defense System” (野戰防空系統), a truck-mounted SAM intended for shorter-range, point air defense.

Ground Attack Systems

  • The special budget would provide approximately NTD $16.8 billion (USD $600 million, 7 percent overall) for the development and production of the Hsiung Sheng (雄昇) missile. This missile, a Hsiung Feng variant which is also called the HF-2E (雄二E), is an intermediate-range surface-to-surface missile (SSM) system potentially capable of striking targets in the PRC.
  • NTD $14.4 billion (USD $510 million, 6 percent overall) will support further production of Wan Chien (萬劍) (“Ten Thousand Swords”) missiles, an air-to-ground munition intended primarily for attacks on fixed ground targets such as ports and radar facilities. 
  • NTD $12 billion (USD $430 million, approximately 5 percent) is planned for the development and production of the Chien Hsiang UAV system (“Circling Sword,” 劍翔無人機), an anti-radiation attack UAV intended primarily to destroy radar stations.

Image: The ceremonies for the October 10 ROC National Day celebration were noteworthy for their inclusion of a military parade that highlighted some of Taiwan’s more advanced military hardware, including Hsiung Feng-3 ASCMs and Tian-Kung SAM systems—an apparent effort by Taiwan’s government to communicate to both Beijing and a broader international audience that it is serious about the island’s defense. (Image source: Formosa News)

Military Force Planning Amid Escalating PRC Military Activity

The content of the special budget suggests that the high-profile incursions into Taiwan’s air defense identification zone (ADIZ) by PLA aircraft over the past year have not prompted a radical reorientation of Taiwan’s acquisition budgets in the direction of air defense assets. Although the special budget does allocate approximately 18 percent of overall expenditure to anti-aircraft (or anti-missile) SAMs, the primary focus on anti-ship systems indicates a more methodical, clear-eyed view of the most dangerous threat to Taiwan: the PLA Navy’s ability to either enforce a blockade, or to escort and transport invasion troops across the Taiwan Strait.

That said, other developments outside the special budget indicate that the MND is looking for ways to respond to the ADIZ incursions, which have placed a strain on ROC Air Force resources. In August 2019, the US Government approved a major arms sale package to Taiwan that included sixty-six F-16C/D Block 70 aircraft (as well as associated equipment, munitions, and technical support), at an estimated cost of USD $8 billion. Ordinarily, such a large package of equipment could take several years to manufacture and deliver—and the aircraft purchased in the 2019 deal have been projected to arrive in batches between 2023 and 2026. However, in light of the escalating ADIZ incursions and other “gray zone” military pressure tactics employed by the PRC, Taiwan officials reportedly reached out to US representatives in October to request expedited delivery of the new F-16s.

The Increasing Focus on Indigenous Defense Production

Another salient aspect of the special budget is its focus on funding indigenously-manufactured weapons programs. Improving Taiwan’s capacity for indigenous defense production has been a significant policy priority under the administration of President Tsai Ing-wen (蔡英文)—who has, for example, made a point of holding public events to mark the entry into service of indigenously-manufactured anti-aircraft missiles in 2019, and the commissioning of the Tuo-Chiang-class corvette Ta Chiang (塔江) into service with the ROC Navy in September 2021. During the latter event, President Tsai praised the ship as a “testament to our ability to overcome any challenge on our path to achieve self-sufficiency in national defense.” Further commentary posted on Tsai’s official Twitter page opined that “Self-sufficiency in national defense is more than just a slogan. It reflects our resolve to […] develop our own national defense capabilities.”

Beefing up Taiwan’s missile forces has become a major emphasis in Taiwan defense planning, and increased missile production has been in the works for some time. The National Chung-Shan Institute of Science and Technology (NCSIST, 國家中山科學研究院)—Taiwan’s primary research and development center for indigenous missiles—was reportedly directed in summer 2018 to expedite and ramp up production for multiple missile systems. President Tsai has made a personal point of promoting Taiwan’s missile development programs: writing in the November/December 2021 issue of Foreign Affairs, she stated that “In addition to investments in traditional platforms such as combat aircraft, Taiwan has made hefty investments in asymmetric capabilities, including mobile land-based anti-ship cruise missiles.”


Although arms sales from the United States often dominate international media discussions about Taiwan’s force planning, the ROC military has been undertaking an active effort to upgrade its inventory of tactical missile systems. The special budget announced in early October reflects this ongoing effort—projecting a significant increase in expenditure for both anti-air and anti-ship systems, but with the latter receiving the lion’s share of the new funding. This reflects an accurate recognition of the most pressing threat to Taiwan: although the PLA’s high-profile ADIZ incursions observed over the past year are a matter of serious concern, it is the steadily growing capabilities of the PLA Navy that pose the greatest existential threat to Taiwan’s autonomy and to its democratic way of life. The focus on indigenous production is also a sensible step away from reliance on the unpredictable nature of US arms sales, and towards self-sufficiency in the weapons systems most critical to Taiwan’s defense. Although Taiwan has often been criticized in the recent past for failing to put adequate resources towards its own defense, the special budget unveiled in October appears to be a significant step in the right direction.

The main point: The proposed supplemental defense budget for Taiwan’s armed forces places a renewed emphasis on anti-ship missile capabilities, with all of the planned acquisitions to be made via indigenous manufacturing rather than foreign arms sales. This represents a significant step forward for enhancing the ROC military’s ability to resist PRC coercion or invasion, as well as for Taiwan’s efforts to pursue greater self-sufficiency in defense production.