TAIPEI, Taiwan – China is increasing its 2025 defense budget by 7.2% to US$246 billion amid growing rivalry with the United States and tensions over Taiwan, marking the fourth consecutive year of more than 7% growth in defense spending.
As China announced its defense budget on Wednesday, Premier Li Qiang reiterated “strong opposition” to those who push for Taiwan’s formal independence and their foreign supporters.
China has ramped up military activities around self-governed, democratic Taiwan, conducting frequent air and naval incursions into the island’s air defense identification zone and staging large-scale drills near its waters. Beijing views Taiwan as an inseparable part of its territory and insists on eventual reunification, by force if necessary.
The 7.2% increase, announced at the National People’s Congress, the annual meeting of China’s legislature, matches last year’s rate but remains significantly lower than the double-digit rises seen in previous years, reflecting an economic slowdown.
Analysts say actual military spending could be at least 40% higher due to expenditures hidden in other budgets.
China’s leadership has set a target for overall economic growth of around 5% for the year.
Since Xi Jinping became president more than a decade ago, the defense budget has ballooned to 1.78 trillion yuan (US$246 billion) from 720 billion yuan in 2013.
Xi aims to complete full military modernisation by 2035, with China’s military developing new missiles, ships, submarines and surveillance technologies.
Its military spending remains the second largest behind the U.S. and it already has the world’s largest navy.
‘Strong opposition’ to Taiwan independence
China announced the new military budget just days after sending dozens of aircraft into territory near Taiwan and briefly setting up a live-fire zone close to the island.
In his comments at the Congress, Premier Li told the nearly 3,000 party loyalists that China still preferred a peaceful solution to the Taiwan issue, but “resolutely opposes” those pushing for Taiwan’s formal independence and their foreign supporters.
“We will firmly advance the cause of China’s reunification and work with our fellow Chinese in Taiwan to realize the glorious cause of the rejuvenation of the Chinese nation,” Li said.
Li’s remarks came a day after U.S. President Donald Trump’s nominee for a top Pentagon post said Taiwan needed to increase its defense spending to about 10% of its gross domestic product to deter a war with China.
Elbridge Colby, the nominee for undersecretary of defense for policy, told the U.S. Senate Armed Services Committee that Taiwan’s current level of defense spending was “well below 3%” and therefore far too low.
“They should be more like 10%, or at least something in that ballpark, really focused on their defense,” said Colby.
Taiwan’s Cabinet had earmarked $647 billion New Taiwan dollars (US$20 billion) for defense spending in 2025, equal to 2.45% of its GDP.
President Lai Ching-te later pledged to propose a special budget to raise defense spending to more than 3% of GDP, though that, too, would require legislative approval.
Under the 1979 Taiwan Relations Act, the U.S. is committed to assisting Taiwan to defend itself but it has long maintained a policy of “strategic ambiguity” on whether it would intervene militarily to protect Taiwan in the event of a Chinese attack.
“Taiwan’s fall [to China] would be a disaster for American interests,” said Colby, explaining that he was trying to draw attention to the fact that the military balance vis-à-vis China has “deteriorated dramatically.”
“What I have been trying to do is shoot a signal flare that it is vital to enable U.S. forces for an ‘effective and reasonable’ defense of Taiwan, and for the Taiwanese and Japanese to do more,” he added.
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In response to Colby’s remarks, Taiwan’s defence ministry referred to Lai’s announcement of “a significant increase in the defense budget.”
“Taiwan’s military’s force modernization plans are based on careful assessments of evolving threats, ensuring that procurement aligns with strategic needs and available defense budgets,” Minister of Defense Wellington Koo Li-hsiung said in a statement to Radio Free Asia.
Referring to the president’s announcement of significant increase in defense spending, Khoo said the focus would be on four key areas: building asymmetric capabilities, strengthening defense resilience, enhancing reserve forces, and effectively responding to “gray-zone” threats.
“Any weapon systems that can rapidly contribute to force modernization will be prioritized for acquisition,” he said.
Taiwan’s defense minister this week said the island was planning to boost military spending in the face of the “rapidly changing international situation and the escalating threats from adversaries” while increasing the scope and duration of its annual military exercise. He did not elaborate on the budget.
Edited by Mike Firn.