Taiwan's leader says government to propose record defence spending for 2027

TAIPEI: Taiwan's government will propose record defence spending for 2027, President Lai Ching-te said on Monday (Aug 17), as the island democracy faces growing military pressure from China.

China views Taiwan as part of its territory and has not ruled out the use of force to bring the island under its control.

Taipei's announcement comes as governments around the world boost defence spending in the face of intensifying conflicts, and growing concern about the United States' commitment to the Asia-Pacific region.

"Next year's total defence budget - including both the annual budget and the special budget - will exceed NT$1 trillion for the first time, reaching NT$1.1225 trillion (US$35.2 billion)," Lai said in a statement issued by the Presidential Office.

Defence spending will account for more than 3 per cent of gross domestic product,  Lai said.

Taiwan has been boosting defence spending for years and acquiring smaller and more nimble weaponry, including drones, to enable its military to wage asymmetric warfare against China.

Under intense US pressure to cough up more on security, Lai's government has vowed to increase defence spending to 5 per cent of GDP by 2030.

But Lai's government has been at loggerheads with Taiwan's opposition parties, which have a majority in parliament, over how much to spend on boosting the island's defence capabilities.

The main opposition party Kuomintang, which favours closer ties with China, and the Taiwan People's Party passed a US$25 billion special defence budget in May, slashing by a third the amount sought by Lai's Democratic Progressive Party.

The opposition stripped out around US$15 billion that the government had wanted to use for domestic drone procurement and other efforts to boost defences.

Lawmakers are now considering rival proposals for drone investment worth billions of dollars that could be passed as early as this week.

The parliament approved the government's annual budget for 2026 on Friday after a record delay, and shortly before it is expected to receive next year's spending proposal for review.

Opposition lawmakers agreed to cut this year's budget by NT$48 billion, or around 1.6 per cent, nearly eight months after the government's spending plan was supposed to be approved.

That is the longest it has ever taken parliament to pass an annual general budget. Parliament is likely to receive the 2027 budget for review by the end of August.