(Deutsche Welle Chinese website) Facing growing military pressure from China, Taiwan President Lai Ching-te said on Monday (August 17) that the Taiwan government will propose a record-breaking defense budget for 2027.
Beijing claims Taiwan as part of its territory and has threatened not to rule out using force to annex the democratic island of 23 million people.
Governments around the world are increasing defense spending as conflicts intensify around the world and concerns grow over U.S. commitments in the Asia-Pacific region. It was against this background that Taipei announced the above-mentioned plan.
Defense budget breaks one trillion mark for first time
"Next year's total defense budget - including the annual budget and special budget - will exceed NT$1 trillion for the first time, reaching NT$1.1225 trillion (approximately US$35.2 billion)," Lai Ching-te said in a statement released by the Presidential Office.
Lai Ching-te said that defense spending will account for more than 3% of the gross domestic product (GDP), which demonstrates Taiwan's determination to strengthen its self-defense capabilities. He said: "Investing in national defense is investing in peace. We will continue to build stronger national defense forces to maintain peace and stability across the Taiwan Strait and the region."
In addition, the proposed total government expenditure in 2027 will reach NT$3.9 trillion, which Lai Qingde pointed out is more than double the 2016 level. The government budget also includes a cash distribution plan of NT$10,000 to each resident, which Lai described as an economic "dividend" brought about by economic growth driven by artificial intelligence that will be shared with the public.
Developing asymmetric combat power and US pressure
For years, Taiwan has been increasing defense spending and acquiring smaller, more agile weapons, including drones, to enable its military to launch asymmetric warfare against China.
Under strong pressure from the United States to shoulder more costs for security and defense, Lai's government has pledged to increase defense spending to 5% of GDP by 2030.
However, there have been disagreements between Lai's government and the opposition parties that hold a majority in Taiwan's Legislative Yuan over how to allocate funds to improve the island's defense capabilities.
The ruling and opposition parties face a new round of budget game
The largest opposition party, the Kuomintang and the Taiwan People's Party, which advocate closer ties with China, passed a special defense budget of US$25 billion in May this year, which was reduced by one-third from the amount requested by Lai's Democratic Progressive Party. At that time, the opposition party canceled about $15 billion in the government's budget that it had hoped to use for domestic drone procurement and other efforts to strengthen defense. Currently, Taiwanese legislators are still reviewing drone investment proposals worth billions of dollars.
It is worth noting that Taiwan’s Legislative Yuan just approved the government’s 2026 annual budget last Friday after a record-breaking delay. Current President Lai Qingde said: "I hope the Legislative Yuan can take this year's 351-day delay as a warning. After next year's central government's general budget is sent to the Legislative Yuan, it will return to rational and professional discussions and complete the review as scheduled in accordance with the legal timetable."
Nearly eight months after they were supposed to approve the government spending plan, Taiwan's legislators voted to cut the originally planned spending of just over NT$3 trillion by NT$48 billion, a reduction of about 1.6% of the total budget. It is expected that the Legislative Yuan may receive the new 2027 government budget before the end of August.
