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This paper attempts to understand how and why China has been portrayed as the primary military threat in Taiwanese security discourse through an examination of offence-defence theory. It is based on the premise that those events or factors that one identifies as dangerous come to be ascribed as such only through an interpretation of their various dimensions of dangerousness. The paper first introduces the protracted debate among the Democratic Progressive Party (DPP) government, the 'Pan-Blue' opposition parties and US officials and analysts over the 2004 Special Defence Budget controversy. In defence of its arms procurement program, the Chen Shui-bian administration resorted to a particular mode of interpreting danger, that is, the military balance across the Taiwan Strait has been shifting in China's favour and thus it is imperative to correct the imbalance through fielding the weapons systems provided by Washington. The paper then explores the underlying assumption of that pervasive interpretation in the official articulation of Chinese military threat in Taiwan and the United States, which holds that offensive advantages make war more likelyâ??a principal hypothesis of offence-defence theory. Rather than questioning the methodological ambiguities about how to define and measure the 'offence-defence balance', the paper argues that it is precisely these ambiguities that make China's threat image in Taiwan possible. The special budget case is indicative as to how Taiwan's defence policy is better understood as a political practice central to the constitution, production, and maintenance of a peace-loving Taiwanese identity contrary to the belligerent Chinese than as an instrument to build and maintain a capable defence posture against potential attacks from the mainland. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]