Taiwan Unveils Record Defense Budget As China Threat Grows

Taiwan is proposing a record defense budget for 2027 as the island pours more money into its military amid mounting pressure from China and calls from Washington for Taipei to shoulder more of its own defense burden.

Taiwan’s government proposed spending 1.12 trillion Taiwan dollars, roughly $35 billion, on defense next year, pushing military spending above 3% of gross domestic product (GDP), according to the country’s Presidential Office. The spending plan would mark the first time Taiwan’s annual defense budget has exceeded 1 trillion Taiwan dollars and comes as Beijing continues sending military aircraft and vessels near the island while periodically conducting large-scale exercises in the region.

China claims Taiwan as part of its territory and has not renounced the use of force to bring the island under its control, while Taiwan has been governed separately from mainland China since 1949.

“China is increasing its military spending and capabilities in unprecedented fashion,” a senior official from the Trump administration told the Daily Caller News Foundation. “We strongly urge Taiwan to invest in defensive military drones. Further delays in drone funding are a concession to the CCP.”

The Pentagon declined to comment.

Taipei plans to direct portions of the increased spending toward drones, missiles and other military modernization efforts, including its indigenous submarine program, Reuters reported Thursday. Funding for Taiwan’s coast guard is also included when calculating defense expenditures because of its maritime security role, according to the outlet.

Taiwanese President Lai Ching-te has pledged to continue increasing military spending to 5% of GDP by 2030 as his government seeks to bolster the island’s ability to deter a potential Chinese attack, according to Taiwan’s Presidential Office. Lai has also pushed Taiwan to modernize its military technology and increase investments in drones and other systems intended to make an invasion more difficult, according to the Presidential Office.

The proposed increase follows pressure from Washington for Taiwan to spend more effectively on its defense. Taiwan should “spend smarter” by investing in unmanned systems that can quickly strengthen deterrence, American Institute in Taiwan Director Raymond Greene said at a June forum hosted by the Research Institute for Democracy, Society and Emerging Technology

Trump cast uncertainty over U.S. support for Taiwan following his May summit with Chinese President Xi Jinping in Beijing, telling Fox News that a delayed U.S. weapons package for Taiwan would depend on China and calling the arms sale a “very good negotiating chip.”

The $14 billion weapons package had still not been submitted to Congress as of Aug. 7, although lawmakers were strongly supportive and expected to approve it quickly once it arrived, Rep. Michael McCaul told TaiwanPlus.

“No, nothing changed,” Trump said during a May 15 interview with Bret Baier on Fox News. “I will say this: I’m not looking to have somebody go independent and, you know, we’re supposed to travel 9,500 miles to fight a war. I’m not looking for that.”

“The President has proposed a $1.5T U.S. defense budget,” a senior official from the Trump administration told the DCNF. “Taiwan faces a direct existential threat and should spend proportionally more.”

The State Department had backed Taiwan’s defense spending push in November 2025, welcoming Lai’s commitments to raise military spending to at least 3% of GDP in 2026 and 5% by 2030, which demonstrated Taiwan’s resolve to strengthen its self-defense capabilities, a department spokesperson told Taiwan’s Central News Agency.

The Taipei Economic and Cultural Representative Office in the United States did not immediately respond to requests for comment.

Washington also expressed disappointment earlier this year after Taiwan’s legislature approved only about two-thirds of a roughly $40 billion supplemental defense package sought by Lai’s government, leaving several domestically produced weapons programs without requested funding, Reuters reported in May, citing an anonymous senior ​U.S. official.

The new proposal could face another fight in Taiwan’s opposition-controlled legislature, which only passed the central government’s 2026 budget last week after a record 266-day delay, Taiwan’s Central News Agency reported.

Delays in approving Taiwan’s 2026 budget threatened 78 billion New Taiwan Dollars, roughly $2.4 billion, in defense spending for weapons procurement, maintenance and training, including funding for HIMARS rocket systems, Taiwan’s Ministry of National Defense said in April.

Secretary of War Pete Hegseth has publicly urged American allies and partners in Asia to raise military spending, arguing that defense expenditures should reflect the threats they face and pointing to higher European spending as an example, according to a Pentagon transcript of his 2025 Shangri-La Dialogue address.

Taiwan’s neighbors also view the island as a key regional security linchpin, with Japan warning that stability around Taiwan is directly tied to its own national security.

A Chinese attack or blockade involving military force against Taiwan could constitute a “survival-threatening situation” for Japan, potentially allowing Tokyo to exercise collective self-defense under Japanese law, Japanese Prime Minister Sanae Takaichi said in November, according to an official Japanese parliamentary transcript

Japan’s Defense Ministry has published a white paper that describes China’s military buildup and growing pressure on Taiwan as part of the greatest strategic challenge facing Japan.

Those concerns are partly driven by Japan’s proximity to a potential conflict.

During Chinese military exercises surrounding Taiwan in 2022, Beijing fired nine ballistic missiles, five of which landed inside Japan’s exclusive economic zone, while another came down roughly 80 kilometers from Japan’s Yonaguni Island, according to Japan’s Defense Ministry. Tokyo has since repeatedly called for the peaceful resolution of cross-strait tensions and warned against attempts to alter the regional status quo through force or coercion.

Tokyo adopted plans in 2022 to bring security-related spending to roughly 2% of GDP and authorized the development of counterstrike capabilities, a substantial shift in Japan’s postwar defense posture, according to Japan’s Ministry of Defense.