Hundreds of guests and engineers from the government-owned aircraft maker Aerospace Industrial Development Corporation (AIDC) applauded as the fighter looped and banked to show off its maneuvering capability.

"The success is not only the latest achievement of our defence industry, but it also demonstrates Taiwan's determination and efforts to defend ourselves," Chen said at the end of the new fighter's 10-minute test flight.

Chen named the new jet "Hsung Ying", or Goshawk -- an indigenous bird renowned for the speed of its attacks on prey.

The AIDC unveiled the prototype of an upgraded single-seated upgrade late last year.

Costing the military seven billion Taiwan dollars (212.12 million US) in a project launched in 2001, the Goshawk had increased its endurance time with the installation of two additional fuel tanks, the AIDC said.

The new fighter has upgraded mission computers and an advanced fire control radar system, and will be armed with four medium-range air-to-air missiles, it said, adding service entry was scheduled for 2010 if further development was successful.

Despite the completion of the upgrade project, the military has yet to decide on whether to upgrade the island's existing IDF fleet.

"Due to the US restrictions imposed on the original IDF design, the upgrade is limited as to the enhancement of the fighter's combat capabilities," said Chang Li-te, of the Taipei-based Defense Technology Monthly.

With the aid of the United States, Taiwan produced 130 IDFs during the 1990s to replace its ageing Lockheed F-104s and Northrop F-5s. But the US has restricted Taiwan from developing offensive weapons that could be used to attack the Chinese mainland.

"If the air force decided not to upgrade the IDFs, it may be forced to ground the whole fleet 10 years from now," Chang said.

He said if Goshawks could be armed with "Wan Chien" (Ten Thousand Swords) cluster bombs that could be used to attack China's coastal military installations, 300 kilometres from Taiwan, they would pose a greater threat to China's military might.

Taiwanese arms researchers have reportedly successfully developed "Wan Chien".

Beijing has repeatedly threatened to invade Taiwan should the island declare formal independence, prompting Taipei to develop and buy advanced weaponry.

But most arms exporting countries have been reluctant to sell Taiwan sophisticated weapons, to avoid irking Beijing.

The United States is the major arms supplier to the island, providing it with defensive weapons in accordance with its Taiwan Relations Act.

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