Currently, the most serious military threat to Taiwan is not invasion, but blockade. The Chinese have a huge submarine fleet, which if unopposed, could easily accomplish this. Hence this story from The Taipei Times, which outlines Taiwan's need for better submarine detection aircraft.
http://www.taipeitimes.com/News/taiwan/archives/2005/10/25/2003277279
Don't expect this to get fixed any time soon, though. Taiwan's KMT party has blocked voting on the special weapons bill 31 times (or is it now 33?) in the legislature, and doesn't seem to be in a mood for compromise. Why you might ask, is the KMT blocking the purchase of weapons it itself requested from America in the late 1990's?
The actual excuses that the KMT offers for their actions seem to change from week to week. Here's a brief list, constructed from memory, along with rebuttals:
1. The price is too high.
The old KMT of Chiang Kai-Shek or Chiang Ching Kuo would have jumped at the opportunity to buy weapons to resist China; the new KMT spurns the chance. Government offers to remove certain items from the bill to reduce the price have left the KMT unmoved. Of course money not spent on weapons can be used to build schools or roads, but what good does that do you if your country's children are turned into communist serfs?
2. The weapons are outdated.
There is some truth here. The weapons are, in fact, not America's top-of-the-line. However, what actually matters is whether the weapons are qualitatively better than the ones available to China. (I believe that this is true for the weapons under discussion.) What this argument seems to say is that Taiwan doesn't like outdated weapons; it instead prefers really, really outdated weapons. Like the ones it currently has.
3. The Americans just want to make money selling weapons to us.
First of all, if selling weapons to the Taiwanese was such a profitable enterprise, why is it that no one aside from America does it anymore? Secondly, people have literally thousands of needs that are met by purchasing things from others. You expect to pay the security guard in your apartment building a fee, so why on earth would anyone expect to get Patriot missiles for free?
4. The weapons are useless anyways. America won't intervene in the event of a Chinese attack, so resistance will merely delay the inevitable.
Sad to say, there might be some truth here. Taiwan would probably fall to a Chinese attack without direct American help. However, it's total conjecture to say that the Americans wouldn't help. I personally think that they would, but I cannot be certain.
If the KMT really believes that America won't help Taiwan during crunch time, then it should publicly inform the Taiwanese electorate, and run a political campaign advocating open and transparent negotiations for Taiwan's immediate surrender. If it wins, then it should avoid the "inevitable" and try to get the best deal that it can.
The failure of the KMT to do this betrays an utter lack of sincerity on their part regarding this argument.
5. The Second Gulf War shows how self-defeating invasion can be. The Taiwanese would fight like tigers, possibly with even more ferocity than the Iraqi "insurgents".
Maybe they would, and then again, maybe they wouldn't. I could be wrong, but I don't think that the Taiwanese have any religious ideology promising them 72 virgins if they die in a suicide bombing. Insurgencies can be crushed, and the Chinese would have no qualms in employing much harsher measures against Taiwanese resistance than Americans are using in Iraq. Surely this should be Taiwan's last choice for a defensive strategy, not its first.
6. Taiwan could unilaterally disarm and it would be perfectly safe. In the current international climate, China would be prevented from attacking Taiwan by the UN and international opinion.
This bizarre "theory" was actually forwarded in an editorial in a Taiwanese newspaper (The China Post). You might want to ask the Tibetans how well that worked out for THEM.
7. We don't want an arms race with China.
You're already in an arms race with China - they're racing and you're standing still. Soon you'll be left by the wayside.