Holmes has a valid point when he writes of China's tremendous progress in building capable warships:
An economically outmatched Taiwan that cannot manufacture or import state-of-the-art warships stands little chance of reversing the momentum.
What to do? Taipei must admit defeat in the arms race -- and then work around it.
This demands a change of mindset. DDGs are "sea-control" ships meant to clear the seas of enemy fleets before exploiting maritime command. The ROC Navy has always regarded itself as a sea-control force, the stronger party to the naval competition. But the weaker navy still has options -- if its commanders and their political masters can bring themselves to admit they are the weaker competitor and devise strategy accordingly. The weak sometimes prevail if they set limited goals and align their meager means to those goals.
One, Taiwan's means are meager because they've refused to spend more than they do on national defense. They could spend more. We spent more in the Cold War as a percent of our GDP, and we had to fund nuclear weapons and power projection capabilities.
But in the end, China can do much more than Taiwan can, and can match Taiwanese spending at whatever level Taiwan chooses. So giving up the notion of controlling the Taiwan Strait is wise. I've argued for that recognition of reality for a couple years, at least. But even though I may not have explicitly mentioned this reality, I certainly assumed Taiwan could not fight for control of the Taiwan Strait 7 years ago when I wrote up a scenario for a Chinese invasion of Taiwan.
Taiwan's older but larger sea-control ships have a role east of Taiwan to keep open their sea lines of communication to the outside world. In the strait itself, Taiwan needs small boats, submarines, and shore-based missiles, artillery, and aircraft to fight the Chinese sea-control forces trying to open the way for an invasion of Taiwan.
In time, if the Taiwanese can inflict serious attrition on the Chinese fleet and air force, the bigger ships might be able to enter the strait to fight a sea-control battle. I doubt it, but that is at least an option for later in the fight. Although if the Taiwanese retain enough ships to support us after we pierce China's anti-access/area denial shield, we might successfully lead a sea-control force into the Taiwan Strait if Chinese power has suffered enough attrition.
What I worry about in how this is formulated is that it might be too easy for the Taiwanese to simply lose the will to defend themselves if they admit defeat, and pretend that there are cheap ways to nullify Chinese power.
Ultimately, as long as the Taiwanese never lose sight of how they can win with whatever they can afford, they may need to consider whether the inability to mount a serious defense means they must go on offense to end the threat to their independence at the source.
After all, when you've ruled out every means of defending yourself, isn't attack the only option left?
