Taiwan plans extra $40 billion in defence spending to counter China

FILE PHOTO: A CM-11 Brave Tiger tank and an M1A2T Abrams tank take part in a commissioning ceremony for Taiwan's first battalion of M1A2T Abrams tanks, at the Hukou military base in Hsinchu, Taiwan October 31, 2025. REUTERS

Taiwan will introduce a $40-billion supplementary defence budget to underscore its determination to defend itself in the face of a rising threat from China, President Lai Ching-te said on Wednesday.

China, which views democratically-governed Taiwan as its own territory, has ramped up military and political pressure over the past five years to assert its claims, which Taipei strongly rejects.

As Taiwan faces calls from Washington to spend more on its own defence, mirroring US pressure on Europe, Lai said in August he hoped for a boost in defence spending to 5 percent of gross domestic product by 2030.

Unveiling the T$1.25 trillion ($39.89 billion) package, Lai said history had proven that trying to compromise in the face of aggression brought nothing but "enslavement".

"There is no room for compromise on national security," he said at a press conference in the presidential office.

"National sovereignty and the core values of freedom and democracy are the very foundation of our nation."

Lai, who first announced the new spending plan in an op-ed comment in the Washington Post newspaper on Tuesday, said Taiwan was showing its determination to defend itself.

"It is a struggle between defending democratic Taiwan and refusing to submit to becoming 'China's Taiwan'," he added, rather than merely an ideological struggle or a dispute over "unification versus independence".

Lai had previously flagged extra defence spending, but had not given details.

For 2026, the government plans such spending will reach T$949.5 billion ($30.3 billion), to stand at 3.32 percent of GDP, crossing a 3 percent threshold for the first time since 2009, government figures showed.

Speaking earlier in Beijing, a spokesperson for China's Taiwan Affairs Office said Taiwan was allowing "external forces" to dictate its decisions.

"They squander funds that could be used to improve people's livelihoods and develop the economy on purchasing weapons and currying favour with external powers," the spokesperson, Peng Qingen, told reporters.

"This will only plunge Taiwan into disaster."

The United States is bound by law to provide Taiwan with the means to defend itself, despite a lack of formal diplomatic ties.

But since President Donald Trump took office in January, it has approved only one new arms sale to Taiwan, a $330-million package for fighter jet and other aircraft parts announced this month.

"The international community is safer today because of the Trump administration's pursuit of peace through strength," Lai wrote in the Washington Post.