Taiwan's record $20 billion defense budget 'will largely cover existing spending'

In a statement released by his office late Tuesday, Lai said: “We are determined to strengthen our self-defense and deepen cooperation with our democratic partners to ensure peace and prosperity.”

Two days later, at a ceremony marking the promotions of senior military officials, Lai reiterated his determination to build a “strong and self-reliant” force against any potential aggression from the military. People’s Liberation Army.

“We are promoting defense reforms, restoring one-year compulsory military service and ensuring adequate armament through self-reliance in defense and military procurement,” he said.

Lai told the assembled officers that the government’s efforts were validated by last month’s decision. Han Kuang Military Exercisesthe island’s largest annual war exercises, which this year included live-fire drills closer to the Chinese mainland.

“Our goal is to build a formidable military force capable of ensuring our survival and development, as well as protecting the lives and property of our people,” he said.

Lai referred to China’s “continued psychological and military intimidation against Taiwan,” including large-scale exercises around the island, and said Taiwanese forces must also strengthen their capabilities in modern warfare.

These include artificial intelligence, unmanned systems, decentralized command and control, and multi-service joint strike capability. “These areas have been clearly observed in Russia-Ukraine War and the Israeli-Palestinian conflict” he said.

Taiwanese leader William Lai Ching-te observes a drill at Hualien airbase during the annual Han Kuang military exercises in July. Photo: EPA — Taiwanese leader William Lai Ching-te watches a drill at Hualien Air Base during the annual Han Kuang military exercises in July. Photo: EPA

Since taking office on May 20, Lai – branded by Beijing as a “separatist” who wants to bring war to the Taiwan Strait – has been listening to the island’s army, navy and air force units.

The proposed budget – which still needs final approval by the island’s cabinet and consideration by the legislature – projects defense spending in 2025 to be about 6.6 percent higher than this year’s NT$606.8 billion.

The increase will bring the island’s defense budget to about 2.65 percent of GDP, up from 2.5 percent this year but still below the 3 percent repeatedly suggested by the United States, Taiwan’s main arms supplier.

Former President of the United States Donald TrumpNow a Republican presidential candidate, said in June that it was “stupid” for the United States to offer free protection to Taiwan, insisting that Taipei must pay more if it wants Washington’s help defending the island.

In the same interview, Trump expressed skepticism about the feasibility of defending Taiwan from such a distance.

Beijing regards the island as part of its territory that will eventually be brought under mainland control, by force if necessary.

Like most countries, the United States does not recognize Taiwan as an independent state. However, Washington opposes any unilateral change to the status quo and is committed to providing weapons for the island’s defense.

The Chinese mainland’s defense budget for 2024 is 1.67 trillion yuan ($232 billion), up 7.2 percent from last year and at least 16.5 times that of Taiwan.

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Military analyst Zivon Wang of the China Council for Advanced Policy Studies think tank in Taipei noted that the proposed record spending reflected Lai’s determination to improve the island’s defenses.

Wang said it would be “difficult” for the government to meet the 3 percent target in one go “because we have other budget allocation arrangements to deal with,” although he expected the United States to continue to pressure Taiwan to do so.

“But more importantly, we need to think about how our budget can be used effectively to reflect the real situation,” he said.

Ying-yu Lin, a professor of international relations and strategic studies at Tamkang University in New Taipei, also said Taiwan should make the best use of its spending based on its real needs, despite U.S. pressure.

“After all, a drastic increase in our defense spending would crowd out other budget allocations,” he said.

Lin stressed that one of the main reasons for the record budget proposed this year was the increase in military personnel spending. This includes an extension of conscription from four months to one year, in line with another U.S. request.

“Since the beginning of this year, compulsory military service has been extended to one year. In addition, active and reserve soldiers will have to be trained in the use of new military tools or weapons. All this requires more expenditures,” he said.

The government has announced a 3 percent pay increase for personnel in the military, public offices and schools, starting next January, a move that would further increase military spending in 2025, Lin added.

Another factor behind the new spending spike, Wang said, is the Defense Ministry’s need to fund its military investments, including purchases from Taiwan and the United States.

“The most significant payment periods for weapons purchases and other investments will be between this year and next year. Once these periods are over, by 2026 and 2027, there will be more financial flexibility to continue related or new military investments,” he said.

The payments cover orders for next-generation weapons to be delivered between 2026 and 2028. These include 108 M1A2T tanks, 66 F-16V Block 70 fighter jets, 29 HIMARS rocket systems and 100 Harpoon land-based missile systems purchased from the United States.

According to the Ministry of Defense, the payments also cover various locally manufactured drones purchased abroad. In addition, part of the budget will be spent on the locally manufactured submarine.