Taiwan aims to increase its defense spending to NT$647 billion (US$19.76 billion) next year to the biggest sum ever as it seeks to bolster its defenses and its cooperation with democratic allies, President Lai Ching-te announced.
That total is equivalent to about 20% of anticipated annual revenue of NT$3.13 trillion (US$96.12 billion) for the 2025 fiscal year, and a nominal increase of 6.7% in defense spending over the previous year.
“We are determined to enhance our self-defense capabilities and strengthen cooperation with our democratic partners to ensure peace and prosperity,” Lai said in a speech on Wednesday as he announced the budget.
The president did not mention China, which considers the self-ruled, democratic island a wayward province, and has never ruled out the use of force against it.
Militaryspending is the fourth-largest itemized category in the budget, behind social welfare, education, science and culture and expenses related to economic development. The prioritization was unchanged from last year.
The spending plan must be approved by Taiwan’s legislature. It has until Dec. 1, a month before the beginning of the fiscal year on Jan. 1, to deliberate.
The proposed increase in military spending maintains a trend of nominal annual growth set during former president Tsai Ing-wen's administration. Taiwan's nominal military expenditure has increased every year since 2017.
While expenditure marked specifically as military funds for the 2024 fiscal year totaled NT$426 billion (US$13.18 billion), it jumped to NT$606.8 billion (US$18.65 billion) when accounting for special funds allocated for military use.
The percentage of Taiwan's gross domestic product (GDP) allocated as military funds fell to a 30-year low of about 2% in 2019 under Tsai's first administration, before rising over the next five years to its current level of about 2.5%.
‘Protecting democracy’
Commentators have pointed out that the proposed 2025 defense budget still falls below 3% of GDP, a widely accepted defense spending target.
However, Taiwan still ranked 21st globally in terms of national military expenditures in 2023, according to the Stockholm International Peace Research Institute, or SIPRI. China ranked second worldwide in the report, with estimated nominal military expenses of US$296 billion in 2023, or 1.7% of its GDP for the respective year.
U.S. officials have requested Taiwan to increase its defense spending in recent years.
“Without budget increases, Taiwan will not be able to protect democracy from the CCP aggression,” U.S. congressman Michael McCaul said on a May visit to Taiwan, referring to the Chinese Communist Party.
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While the U.S. does not have formal ties with Taiwan, it is required by a U.S. law to aid the island with its defenses and is its main source of military equipment, supplying 99% of its arms imports between 2019 to 2023, the SIPRI said.
The proposed increase in military expenses comes as tensions across the Taiwan Strait simmer.
Beijing fiercely opposed Lai in his bid to become president. He ran on a platform of promoting peace in the Taiwan Strait while not compromising on claims of Taiwanese sovereignty.
China responded to Lai’s inauguration in May with two days of military exercises around the island. Taiwan held its annual Han Kuang military drills on the island of Kinmen in late July.
Separately, in June, China enacted legislation enabling the arrest of Taiwanese citizens who help further, or advocate for, Taiwanese independence.
On Aug. 1, China published a list of 10 wanted "diehard Taiwanese separatists", including Vice President Hsiao Bi-khim and former Democratic Progressive Party chairman Su Tseng-chang.
Edited by Taejun Kang.