MELBOURNE, Australia ― Taiwan appears to have conceded defeat in its quest to acquire surplus M1 Abrams tanks from the United States, with local media reporting that the East Asian country will now look at ways to locally upgrade the M60A3 main battle tanks it has in service.

According to the United Daily News newspaper, Taiwan’s Ministry of National Defense will allocate approximately $6.57 million dollars to the state-owned National Chung-Shan Institute of Science and Technology, or NCSIST, to develop an upgrade program for the approximately 450 M60A3 TTS tanks operated by Taiwan’s Army.

The program, scheduled to begin in 2018, will look at replacing the main gun from the 105mm M68 to a new 120mm weapon, as well as upgrading the ballistics computer, turret hydraulics and other systems.

The Army will loan two M60A3s to the NCSIST to serve as prototypes for the upgrades, with testing and evaluation expected to be completed in 2019 and the main upgrade program expected to start in 2020.

Other than the M60A3 TTS, Taiwan also has approximately 400 CM-11 Brave Tiger tanks developed by General Dynamics and the Army’s Armored Vehicle Development Center. The CM-11 is a hybrid M60 chassis fitted with the turret from the older M48 Patton and the fire control system of the M1 Abrams.

The newspaper reported that Taiwan has opted to upgrade the M60A3 ahead of the CM-11 due to the former’s larger turret and better upgrade potential; although it also said there are plans to upgrade the CM-11 fleet following the M60A3 upgrade.

The decision to locally upgrade Taiwan’s M60A3s — despite the availability of upgrade options from overseas companies such as Raytheon or IMI Systems (formerly Israel Military Industries) — is likely driven in part by the stated policy of President Tsai Ing-wen’s administration, which calls for greater local participation by the local defense industry in military programs.

As evidenced by its inability to secure surplus M1 Abrams, Taiwan has faced significant hurdles in trying to acquire advanced, big-ticket military equipment, with potential suppliers wary of incurring China’s wrath. China sees Taiwan as a breakaway province and has frequently used economic and diplomatic means to prevent arms sales to Taiwan.