Taiwan's navy fired anti-submarine rockets and guns Wednesday simulating their response if China launched an invasion, as part of the island's biggest naval drill in 25 years.

The event was presided over by President Ma Ying-jeou and staged primarily in the coastal waters off the eastern Hualien county.

A total of 88 vessels were mobilised during the event, which is part of the five-day "Han Kuang 30" (Han Glory 30) war game that began on Monday.

"By the number of warships, it is the biggest naval drill for 25 years," defence ministry spokesman David Lo told AFP.

The exercise, which is held annually, usually features around 50 vessels, Vice Admiral Huang Shu-kuang said.

This year the war games included a scenario where Taiwan was facing attack by Chinese invaders and featured a simulated submarine ambush on the naval forces, as well as staged attacks by air and other ships.

"The scenario is multiple threats by the enemy from the air, the surface and under the sea," Huang said.

At the end of the drill, Ma reviewed the fleet in a rare grand maritime parade.

Ties between Taiwan and China have improved markedly since 2008 after Ma f the China-friendly Kuomintang party came to power on platform of ramping up trade and tourism with China.

But China still refuses to renounce its use of force against Taiwan should the island declare formal independence.

Taiwan and China split in 1949 at the end of a civil war.