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The Taiwanese navy currently operates a fleet of four submarines, but only two of them can be deployed in the event of war. The other two were built by the United States in the 1940s and are too old for combat.
In April 2001 then-US president George W Bush approved the sale of eight conventional submarines as part of Washington's most comprehensive arms package to the island since 1992.
Since then, however, there has been little progress. The United States has not built conventional submarines for more than 40 years and Germany and Spain have reportedly declined to offer their designs for fear of offending Taiwan's rival, China.
Taiwan is running out of patience, especially since China has been fast expanding its own military.
Taiwan, which has governed itself since 1949, still sees a need to modernise its armed forces because China regards the island as part of its territory awaiting reunification - by force if necessary.
Under a four-year contract, work on the design is slated to begin in 2016 and cost an estimated T$3 billion (US$94.46 million). Preparatory work will begin in 2015 with an approved budget of T$10 million. It was unclear when work would start on building the submarines.
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