Taiwan on Wednesday unveiled a landmark supplementary defence budget of US$40 billion to counter what its leadership described as mounting and accelerating threat from neighbouring China. The package, covering the period 2026–2033, represents the largest special outlay in decades and reflects a strategic shift aimed at strengthening the island’s ability to defend its democracy, sovereignty and people.
According to Lai Ching-te, the island’s president, Taiwan faces a complex array of risks—from military harassment, espionage, propaganda and threats to Taiwanese citizens abroad to mounting pressure aimed at undermining the island’s autonomy. He stressed that the defence build-up is not about ideology or partisan debates over reunification, but a “struggle to defend democratic Taiwan” and to reject attempts to turn the island into “China’s Taiwan.” He reminded citizens and the international community that “there is no room for compromise on national security.”
Under the plan, Taiwan’s defence spending is expected to rise to around 3.3 percent of GDP in 2026, with a long-term target of reaching 5 percent by 2030. Key allocations will go toward bolstering asymmetric warfare capabilities—such as drones, missiles, air-defence systems and modernized procurement processes—as well as enhanced AI-driven systems and expanded protections for overseas Taiwanese nationals. The government also cited repeated delays and bottlenecks in prior procurement efforts, and says the new funding will help overcome those and speed up critical upgrades.
The plan has drawn a cautious welcome from the United States, which remains Taiwan’s primary external arms supplier, with its de facto representative in Taipei commending the move as “a major step towards maintaining peace and stability across the Taiwan Strait.” On the other hand, Beijing — which claims Taiwan as part of its territory and has bristled at the announcement — dismissed the budget as an unnecessary militarization and accused Taipei of courting external powers at the expense of peace.
The announcement comes at a time of rising regional tensions. China’s repeated military incursions, espionage attempts and pressure tactics — combined with shifting diplomatic alignments, including recent friction between Beijing and Tokyo over potential Japanese involvement should Taiwan be attacked — have amplified Taiwan’s sense of urgency.
Despite concerns from opposition parties in Taiwan’s parliament about the scale of borrowing and acceleration of arms purchases, the government argues that strong deterrence is the only way to ensure that any attempt at coercion or force fails. For policymakers in Taipei, the new budget signals a clear message: Taiwan is ready to defend its sovereignty — and is prepared to invest heavily to ensure it stays free and democratic.
