Taiwan's President Ma Ying-jeou inaugurated a squadron of missile boats Thursday as he pledged to continue the island's military buildup to offset the perceived military threat from China.

The fleet of 10 locally manufactured missile boats joined the navy following a ceremony presided over by Ma at the northeastern naval base in Suao.

Ma, the initiator of detente with the island's giant neighbour, said tensions with the mainland have eased significantly since he came to power in 2008 but insisted Taiwan needed a deterrent against Beijing which claims the island as part of its territory.

"Unlike the Korean Peninsula where tensions have been escalating, ties across the Taiwan Strait have improved significantly since I took the office nearly three years ago," he said.

"But mainland China remains the biggest threat to Taiwan militarily, therefore we must not relax in pushing for the military buildup," he said.

Despite fast-warming ties, Beijing refuses to renounce the use of force if the island declares independence, even though Taiwan has been self-governing since 1949 at the end of a civil war.

Ma said Taiwan was unlikely to engage in an arms race with China, considering the vast difference in the size of the two economies.

"But Taiwan can still operate a small but elite and strong defence force in line with the guidelines of asymmetric warfare," under which the weaker side uses strategy to offset deficiencies in quantity or quality, he said.

The navy is building another 10 missile boats and is scheduled to take delivery of them before the year's end, which will bring to 30 the number in service.

Each of the 171-tonne vessels is armed with four Taiwan-made Hsiungfeng II (Brave Wind) ship-to-ship missiles.

The ships are intended to replace the aging 50-tonne Seagull-class missile boats, the navy said.