Facing an increasingly assertive China, Taiwan is preparing one of the largest defense-spending boosts in its modern history. President Lai Ching-te has announced a proposal for an extra $40 billion U.S. dollars in military funding, to be delivered through a multi-year supplementary budget.
The new funds would be used to acquire advanced missiles, strengthen air-defense networks, expand drone and surveillance capabilities, and harden critical infrastructure against potential attacks. Taipei is already in talks with Washington about which U.S. systems could be financed through the package, including additional fighter jets, long-range precision weapons and maritime assets designed for asymmetric warfare.
China, which claims Taiwan as part of its territory, has ramped up military exercises near the island over the past five years, regularly sending warplanes across the median line of the Taiwan Strait and dispatching naval vessels around the island. Taiwanese officials say the new budget is a direct response to that sustained pressure and is meant to raise the costs of any attempted invasion.
If approved by Taiwan’s parliament, the spending plan would lift defense outlays from just over 3% of GDP today toward around 5% by the end of the decade—one of the highest ratios among advanced economies. Supporters argue that investing heavily now is cheaper than dealing with the economic and human costs of a conflict later. Critics worry about the strain on public finances and the risk of further provoking Beijing.
For regional security analysts, the proposal is another sign that the Taiwan Strait is becoming the central flashpoint in U.S.–China rivalry, with defense budgets, arms sales and deterrence strategies closely watched across the Indo-Pacific.