Taiwan announces $40 billion defence budget to counter Chinese threats

Wednesday 26 November 2025 - 16:30

By: Sahili Aya

Taiwan announces $40 billion defence budget to counter Chinese threats

Taiwan has unveiled a historic $40 billion US dollar (1.25 trillion New Taiwan dollar) supplementary defence budget covering the next eight years, a move President Lai Ching-te described as a commitment to protecting the island’s democracy.

“Investing in defence is investing in security and in peace,” Lai said during a press conference on Wednesday. He emphasized that as China increases military pressure, democratic nations in the Indo-Pacific region—including Japan, South Korea, the Philippines, and Australia—are forging a consensus on “island-chain defence and shared responsibility,” prompting increased defence spending to counter Chinese threats.

The proposed budget for 2026-2033 will fund new weapons acquisitions from the United States and bolster Taiwan’s asymmetric defence capabilities. According to Lai, Taiwan aims to raise defence spending to 3.3% of GDP by 2026 and eventually to 5% by 2030, marking the largest sustained military investment in the island’s modern history.

While the plan still requires parliamentary approval, the opposition-controlled legislature, particularly the China-friendly Kuomintang, may influence its final adoption. The American Institute in Taiwan (AIT) welcomed the announcement, framing it as part of broader global efforts—including in Europe, Japan, and Korea—to deter unprecedented security challenges.

China has warned that military resistance to “reunification” would fail. Tensions in the region have also escalated due to recent Japanese statements warning that a Chinese attack on Taiwan would constitute an “existential crisis,” and plans to deploy missiles on Yonaguni Island, located just 110 kilometers from Taiwan.