That's the thing. Taiwan should not be given diesel subs, it should be given nuclear powered subs such as our Ohio class SSBN. China only has the Xia-class SSBN which is not that powerful. The Chinese could try to acquire the Typhoon-class SSBN from Russia but I don't believe the Russians would sell them that (but they might if they offer a high enough price). China has over 500 ballistic missiles pointed at Taiwan. That's enough to completely level the island. Taiwan needs nuclear capability.
Well as much as i agree with ur point-the question is how can a nation which has only operated diesel subs (which weigh only upto 2,000 tonnes atmost) operate a 22,000 ton behemoth( that is if the US sold them one-which is highly impossible as of now).They haven't built subs-so building a big nuke boat is nigh on impossible.For eg-the Chinese Han class nuke attack boats were a big big dissappointment when it entered service in the 70s-high radiation,noise problems etc-so with the Xia class SSBN.The only option for Taiwan would be to either buy/build a diesel electric sub with AIP &give it a modest nuke strike capability with cruise missiles which have a range of around 500 kms(the Tomahawk or a sea launched JASSM comes to mind,but will the US take the risk to sell it to them)-Nuclear capability on diesel subs is nothing new ,Israel is definitely thought to have it on its Dolphin class subs ,while India is rumoured to have it on its Kilo class subs.Another option would be to build a small nuke attack boat like the French Rubis class which weight only 2500 tonnes.Having said all that ,it will take time to build such a system -by that time a red flag may be flying on top of the Taiwanese parliament.Besides the Chinese are a dictatorship-do u think they would be deterred by a few nukes which may destroy atmost few naval bases or 1 city(afterall ,most Chinese ,irrespective of their political leanings see Taiwan as a part of China)-that cannot be said of Taiwan which is a democracy & no government there would be willing to see their homeland sent into the history books(which i assure u ,the Chinese communists are not hesitant to do).
The Xia may be a dissapointment-but the Chinese are building a new class of SSBNs (type 094 ,if im correct)-which will be on par with modern SSBNs & carry 16 missiles with MIRV warheads,they will probably be in service by 2007-2008.These could hit the US mainland without venturing into the deep Pacific,hence be protected by the Chinese fleet or hit India without having to enter the Indian ocean.Actually most folks here don't know that Russia never sells China it's best systems-afterall it see's them as a longterm threat.For eg Chinese Su -30s are fitted with baseline Russian systems & have no canards or thrustvectoring engines unlike Indian & Malaysian ones-same too with their MI-17 helos,which have a simple avionics fit & poor night vision capabilities when compared to Indian or Russian variants.So i don't see the Russians selling the Typhoons to them soon,besides the Chinese may not be wanting it either (logistical nightmare).