By Carlos Garcia, Walid Berrazeg and Sarah Wu
KAOHSIUNG,&nbsp;Taiwan&nbsp;(Reuters) -Taiwan&nbsp;unveiled its&nbsp;first&nbsp;domestically&nbsp;developed&nbsp;submarine&nbsp;on Thursday, a major step in a project aimed at strengthening the island's&nbsp;defence&nbsp;and deterrence against the Chinese navy, though it won't enter service for another two years.
Taiwan, which China claims as its own territory, has&nbsp;made&nbsp;the indigenous&nbsp;submarine&nbsp;programme a key part of an ambitious project to modernise its armed forces as Beijing stages almost daily military exercises to assert its sovereignty.
President Tsai Ing-wen, who initiated the plan when she took office in 2016, showed off the&nbsp;first&nbsp;of eight new&nbsp;submarines on Thursday in the southern city of Kaohsiung.
"In the past, a&nbsp;domestically&nbsp;developed&nbsp;submarine&nbsp;was considered an impossible task. But, today, a&nbsp;submarine&nbsp;designed and manufactured by our country's people sits before our eyes," Tsai said, adding that it would play an important role in strengthening the navy's "asymmetric warfare" capabilities.
"Even if there are risks, and no matter how many challenges there are,&nbsp;Taiwan&nbsp;must take this step and allow the self-reliant national&nbsp;defence&nbsp;policy to grow and flourish on our land," Tsai said, standing in front of the ship, named the Narwhal.&nbsp;Taiwan's red flag, featuring a white sun against a blue sky, was wrapped around the&nbsp;submarine's bow.
Tsai said the Narwhal will enter service in 2025, joining two existing&nbsp;submarines purchased from the Netherlands in the 1980s.
China's&nbsp;defence&nbsp;ministry, responding to a question at a regular monthly press briefing about the&nbsp;submarine&nbsp;and how it could prevent China surrounding the island, said&nbsp;Taiwan&nbsp;was "over-rating itself and attempting something impossible".
"As for talk about preventing the People's Liberation Army from entering the Pacific Ocean, this is idiotic nonsense," spokesman Wu Qian told reporters in Beijing.
DIPLOMATIC BREAKTHROUGH
The indigenous&nbsp;submarine&nbsp;programme has drawn on expertise and technology from several countries - a breakthrough for diplomatically isolated&nbsp;Taiwan.
Cheng Wen-lon, head of&nbsp;Taiwan's CSBC Corp, which led construction of the&nbsp;submarine, said the domestic content of the boat was about 40%. He&nbsp;made&nbsp;no explicit mention of foreign participation in his speech in Kaohsiung.
Underscoring the importance of the United States' security relationship with the island despite a lack of official ties, the de facto U.S. ambassador to&nbsp;Taiwan, Sandra Oudkirk, attended the ceremony. The United States is&nbsp;Taiwan's largest arms supplier.
Speaking to reporters in Taipei,&nbsp;Taiwan&nbsp;Foreign Minister Joseph Wu said that faced with an increased threat from China's military "grey zone" pressure tactics close to the island with air and naval activities,&nbsp;Taiwan&nbsp;had to strengthen its&nbsp;defences.
"Having a new&nbsp;submarine&nbsp;is one of those strategies. For anyone who questions&nbsp;Taiwan's&nbsp;submarine&nbsp;strategy, I would be a most forceful advocate for&nbsp;Taiwan&nbsp;to acquire&nbsp;submarines because that's needed to deter war from taking place," Wu said.
Taiwan&nbsp;hopes to deploy at least two such&nbsp;domestically&nbsp;developed&nbsp;submarines by 2027, and possibly equip later models with missiles, the head of the program said this month.
The&nbsp;first&nbsp;submarine, with a price tag of T$49.36 billion ($1.53 billion), will use a combat system by Lockheed Martin Corp and carry U.S.-made&nbsp;Mark 48 heavyweight torpedoes. It will enter sea trials next month before delivery to the navy by the end of 2024.
Admiral Huang Shu-kuang, Tsai's security adviser leading the programme, has described the&nbsp;submarines as a "strategic deterrent" that can also help maintain the island's "lifeline" to the Pacific by keeping ports along&nbsp;Taiwan's eastern coast open.
(Reporting by Carlos Garcia, Walid Berrazeg and Sarah Wu; Additional reporting by Ben Blanchard in Taipei and Yew Lun Tian in Beijing; Editing by Simon Cameron-Moore)

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Taiwan reveals first domestically made submarine in defence milestone