President Tsai Ing-wen has vowed to boost the island's defence capabilities after Beijing stepped up miltiary exercises toward Taiwan this year. The new fleet of eight submarines will be ready by 2025.
Taiwan warned China on Tuesday that it will do whatever it takes to defend its sovereignty as the island launched production of a new fleet of submarines. It comes at a time of rising tensions with Beijing.
"This submarine is an important part of allowing our navy to develop asymmetric warfare and to intimidate and block enemy ships from surrounding Taiwan’s main island," said President Tsai Ing-wen at the inauguration ceremony in the southern city of Kaohsiung.
"Now, with the construction of the submarine to its future commission, we will certainly let the world know our persistence in safeguarding our sovereignty."
The island has never produced its own submarines before. The first of the eight new vessels will be delivered by 2025. The whole project is estimated to cost at least $16 billion (€13.5 billion).
What is the current situation between China and Taiwan?
Democratically-run Taiwan, which China claims as its own territory, currently has four submarines. That includes two dating to World War II. China’s fleet includes vessels able to launch nuclear weapons.
China has never renounced the threat of taking Taiwan back by force, which it regards as a breakaway province.
This year, Beijing has stepped up military exercises toward the island this year, flying fighter jets and reconnaissance planes over its airspace.
The United States is Taiwan's main ally. A law, known as the Taiwan Relations Act, obliges the government to ensure the island can defend itself.
Just last month, the US State Department approved weapons sales of $1.8 billion to the Taiwanese military, angering Beijing.