Taiwan to Boost Defense Spending, Crossing 3% of GDP Threshold

An illustration, captured on April 11, 2023, depicts a Navy miniature positioned in front of displayed Chinese and Taiwanese flags.

Taiwan's cabinet is planning to allocate T$949.5 billion ($31.27 billion) for defense spending in the upcoming year. This represents 3.32% of the island's gross domestic product, exceeding the 3% threshold for the first time since 2009.

This decision is made against the backdrop of increasing military and political pressure from China. China considers Taiwan, a self-governed democracy, as its own territory, a claim that Taiwan strongly disputes. Furthermore, Taiwan is facing pressure from the United States to increase its defense spending, similar to the pressure the U.S. exerts on European nations. President Lai Ching-te recently expressed his desire to raise defense spending to over 3% of GDP next year.

The budget encompasses funding for the coast guard, veterans, and special projects. The specific percentage increase over the current year's defense spending was not disclosed. For the first time, Taiwan is including coast guard spending in its overall defense budget, according to two senior officials familiar with the matter. One official noted the coast guard's frontline role, highlighting their involvement in regular stand-offs with China's coast guard. In the event of war, the coast guard would be integrated into the navy's defense efforts. The cabinet is scheduled to hold a press conference later to reveal the budget details.

The Taiwanese government has prioritized military modernization and has consistently committed to increasing defense spending due to the growing threat from China. This includes the development of domestically produced submarines.

China's air force conducts frequent missions near Taiwan, and periodic war games are held, the most recent being in April. China is also rapidly modernizing its armed forces, with new aircraft carriers, stealth fighter jets, and missiles. In March, China announced a 7.2% increase in its defense spending for this year, reaching 1.78 trillion yuan ($248.17 billion), surpassing its economic growth target of approximately 5% for 2025.