Any technology given to Taiwan will be transferred directly to China in 1.2.3. Really bad idea. Submarines are the one area where we dominate the rest of the world. Please tell me we are not giving them our good stuff.
And what exactly are they going to gain? It is not like the Chinese have not been building submarines for decades.
At this time, the RoC has 4 submarines. 2 are the old Post-war era Tench class US subs (1944 and 1945). They also have 2 subs built in the mid-1980's by the Netherlands, based on the early 1950's era Barbel class.
They are not going to be building nuclear subs, nor are they going to be building ballistic subs. Odds are they will be building an updated Barbel class boat. They do not even need something along the lines of the Netherlands Walrus class, it is to big for their needs.
Trust me, we have been out of the Conventional Submarine business for over 30 years, and have not even built one in almost 60 years. I doubt there is any technology along those lines that we can sell to RoC that the PRC can use.
And the actual technology they are wanting is Air-Independent Propulsion (AIP). And interestingly enough, that is a technology that the US never really perfected. They played around with it in the 1950's, using designed taken from the Germans after WWII. But with the advent of nuclear propulsion, it was quickly abandoned. However, 18 other nations (including the PRC) are already using AIP technology, and have been doing so for a decade or more.
If I have to guess, what they are probably trying to procure is some advanced fuel cell technology, which is something the US is very experienced in using. Because the other technologies are highly unlikely. The Open Cycle and Closed Cycle diesel engines were very dangerous to use, and each had their own risks of catastrophic explosions. The Closed Cycle Steam Turbine is not a very efficient design, and is very expensive to make. The only other system used is the Stirling engine, which once again is a technology that the US has never had much interest in due to it's inefficiency.
So that means it is likely that they want to acquire fuel cells. Along with possibly some other technology like possibly the plans for the Barbel class, as well as possibly life support technology and possibly navigation equipment.