Defense officials now concede a U.S. offer earlier this year to sell diesel submarines to Taiwan may never come to fruition.
Last April, in a move that outraged Beijing, the Bush administration offered to sell Taiwan a variety of weapons systems, including eight new diesel submarines.
At the time, Pentagon officials described the decision as a U.S. effort to help Taiwan, with only four submarines, to counter China's expanding undersea fleet, expected to number some 60 vessels in a few years.
But there was a problem: the United States hasn't built diesel submarines since the 1950's and the major foreign designers, Germany and the Netherlands, fearful of souring their relations with China, voiced immediate reluctance to any licensing deals destined for Taiwan.
Now U.S. defense officials indicate the planned sale may collapse, especially if the submarines have to be designed and built from scratch. As one Pentagon source put it, they will be so outrageously expensive that Taiwan itself will probably decide to spend its money some other way.
As a result, this source said, questions are already being raised in Washington about the seriousness of Taiwan's interest in pursuing the possible purchase of submarines.
Despite this, U.S. officials have been quietly gathering information from American and foreign industry representatives who might be interested in the Taiwan project.
The officials said several firms have submitted so-called "concept papers" to the Pentagon. These are not formal bids, the official said. They said the documents are now being studied.
China has meanwhile voiced fresh opposition to the potential submarine sale. A Foreign Ministry spokeswoman in Beijing told reporters this month such sales could damage Sino-U.S. relations.