Taiwan’s $40B defense plan marks bold response to China’s rising military threat

TAIPEI: Taiwan is gearing up for one of its biggest defence shake-ups in years, with President Lai Ching-te announcing plans for a US$40 billion (S$52.06 billion) supplementary budget—a clear signal, he says, that the island is determined to protect itself as pressure from China continues to mount. Lai framed the move as both a practical investment in new U.S. weapons and a message of resolve at a tense moment in the region.

For years, China has stepped up military drills and political coercion around Taiwan, insisting the democratic island belongs to Beijing. Taiwan firmly rejects that claim, and the United States has increasingly pushed Taipei to boost its own defences even as Washington remains legally committed to helping the island protect itself.

Lai has long said Taiwan must spend more to stay safe, and he’s aiming high: He wants defence spending to reach 5% of GDP by 2030. The new budget would go a long way toward that goal, funding what he calls “significant” new U.S. arms purchases and strengthening Taiwan’s “asymmetric” defences—technology and tactics designed to make any attempted invasion by China unpredictable and costly.

“In doing so, we aim to bolster deterrence,” Lai wrote. “By inserting greater costs and uncertainties into Beijing’s decision-making on the use of force.”

Until now, Lai had spoken only in broad terms about boosting the military. His office says more details will come on Wednesday, when he appears with Defence Minister Wellington Koo after a meeting with senior security officials.

Looking ahead to 2026, Taiwan is proposing T$949.5 billion (US$30.25 billion) in defence spending—3.32% of GDP, marking the first time the budget has crossed the 3% threshold since 2009.

Although the U.S. and Taiwan don’t have formal diplomatic ties, American law requires Washington to provide Taiwan with tools to defend itself. Still, under President Donald Trump’s administration, only one new arms sale has been approved so far: a $330 million package for fighter jet and aircraft parts earlier this month.

Lai thanked the U.S. for its continued backing, praising the Trump administration’s “peace through strength” approach to global security. And while he again expressed a desire to sit down with Beijing, China has repeatedly rejected his overtures, calling him a “separatist.”

“We will continue to pursue opportunities for cross-strait dialogue,” Lai said, “but our democracy and freedom remain non-negotiable.”

If approved, the new defence package would put Taiwan on a path toward unprecedented military readiness—an effort Lai hopes will help the island navigate an increasingly fraught Indo-Pacific landscape.