Taiwan tests new cruise missile

Stratfor Intelligence

5 September 2003

Taiwan has tested a new cruise missile, believed to have a range of up to 620 miles.

According to the Taipei Times, the prototype flew in a 12-mile circle on the island 50 times. The missile has been designated the Hsiung Feng-2E.

A 620-mile range would give the missile enough range to hit Shanghai and other key targets in China. Its deployment is intended to counter the growing short-range missile threat from China, which currently has some 450 CSS-6 and CSS-7 missiles targeted on Taiwan.

The new cruise missile's design is based on the Hsiung Feng-2 anti-ship missile.


Taiwan struggles to finance military programs

Taiwan may be considering a special budget to fund the early warning radar, PAC-3, and diesel submarine programs.

The Ministry of National Defence (MND) has reported that a special budget of U.S. $20.3 billion will be needed to fund the three programs, according to the local Chinese-language United Daily News (UDN).

However, Taiwan is suffering from an increasingly difficult economic recession as more Taiwan businesses move to China. Fewer voices are calling for military spending.

Though Taiwan has the fourth-largest foreign exchange reserve, amounting to U.S. $110.6 billion, it is unable to use these funds except for emergency contingencies (war ironically being one of them).

Taiwan is not a member of the International Monetary Fund (IMF) due to pressure from rival China and therefore is constrained from turning to the IMF for funds if the need arises.

Taiwan's Legislative Yuan (LY) will have to debate and then approve the budget before any action can be taken.

A U.S. defense contractor noted: "While we are a long way from seeing any special budgets passed, at least, people are talking the right language. It will cost around U.S. $20 billion to pay for these three systems, the submarine program being the most expensive." However, many in the LY want Taiwan to develop its own indigenous weapons systems instead of continuing to rely on expensive U.S. platforms.

China Shipbuilding Corp. is attempting to develop its own indigenous submarine program. Chungshan Institute of Science and Technology is attempting to develop a low-altitude anti-tactical ballistic missile program using a combination of Tien Kung (Sky Bow) surface-to-air missiles and the ADAR Chang Bei (Long White) and Chang Shan (White Mountain) phased array radars.

U.S. defense contractors must begin rethinking the Taiwan market from the perspective of pursuing more joint ventures to develop new weapons systems, an official from MND's Bureau of Armaments and Acquisition said.