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Taiwan Defence and Security Report Q4 2010
Business Monitor International, Oct 2010, Pages: 76
The Taiwan Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Taiwan's defence and security industry.
Taiwan’s defence industry sits at the centre of a complex political and economic web of relations between the US and China. A potential US-Taiwan arms deals announced in January 2010 was the latest item to disrupt US-China affairs, illustrating the pivotal role of the small island state. A lack of military contact between the US and China has meant that increased pressure is placed on frontier zones. In Taiwan, there remains distrust over Chinese intentions with Taiwan's parliament issuing a report expressing its suspicion that China would attempt use the bilateral Economic Cooperation Framework Agreement (ECFA) signed by the two countries in June as a means toward China's political goal of reunification. The parliamentary report warned that China would seek to compel Taiwan to participate in political discussions of peaceful reunification, once Taiwan became more economically dependent on China.
The Quadrennial Defence Review (QDR) published last year provided a detailed analysis of ‘asymmetric warfare’ in relation to the military balance across the Taiwan Strait. President Ma Ying-jeou said on May 19 that Taiwan ‘cannot possibly engage in an arms race with China,’ and that Taiwan has ‘limited national resources and we have to make the best uses of them’. Taiwan has instead opted to promote an elite and high tech military. In Q210, the first of 30 stealth 170-ton Kuang Hua-6 (KH-6) guided-missile patrol ships were put into operation in the Taiwanese navy.
Taiwan's economy expanded 12.5% y-o-y in Q210, on target for our 9.0% y-o-y real GDP growth forecast for 2010. Nonetheless, we reiterate that growth is set to moderate in H210 on the back of fading base effects and weakening external conditions, with 2011 real GDP growth coming in at 1.4% as the Taiwanese economy reels under the effects of a Chinese economic slowdown.
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