Taiwan’s Defence Spending Increase

By Yimou Lee and Ben Blanchard

TAIPEI (Reuters) – Taiwan’s defense spending will rise 7.7% next year, outpacing expected economic growth, as the island adds more fighter jets and missiles to strengthen deterrence against a rising threat from Beijing.

China, which views democratically governed Taiwan as its own territory, has ramped up military and political pressure over the past five years to assert those claims, which Taipei strongly rejects.

Taiwan’s cabinet announced after a regular weekly meeting that 2025 defense spending would increase 7.7% year-on-year to T$647 billion ($20.25 billion), accounting for 2.45% of gross domestic product, up from 2.38% this year, and exceeding the government’s expectation for economic growth of 3.26% for the year.

The spending includes a special budget worth T$90.4 billion to buy new fighter jets and ramp up missile production, part of a military spending increase of T$240 billion announced in 2021 over five years.

Hsieh Chi-hsien, head of the defense ministry’s comptroller bureau, stated that reaching 3% of GDP is a goal they hope to achieve, emphasizing that Taiwan’s defense spending is “growing steadily.” He noted, “We will not join in an arms race with other countries. We will increase steadily according to our needs.”

Future spending will depend on acquiring “key and important” equipment, but details were not provided. Taiwan’s government has made military modernization a key policy platform and has repeatedly pledged to spend more on defense amid rising threats from China, including developing domestically produced submarines.

China’s air force conducts almost daily missions near Taiwan and staged war games around the island in May after President Lai Ching-te took office, whom Beijing brands a “separatist.” Lai rejects China’s sovereignty claims, stating that only Taiwan’s people can decide their future.

The budget still requires parliamentary approval, where the ruling Democratic Progressive Party (DPP) lost its majority in January elections. The main opposition party, the Kuomintang, supports strengthening the island’s defenses while being engaged in a standoff with the DPP over contested reforms.

China is also rapidly modernizing its armed forces, with new aircraft carriers, stealth fighter jets, and missiles. In March, China announced a 7.2% rise in defense spending for this year to 1.67 trillion yuan ($234.10 billion), outpacing an economic growth target of around 5% for 2024, though accounting for about 1.3% of GDP.

Successive U.S. administrations have urged Taiwan to modernize its military. The United States remains Taiwan’s most important arms provider and international supporter despite lacking diplomatic relations. Speaking at a security forum in Taipei on Wednesday, Nikki Haley, a former U.N. ambassador, praised Taiwan’s commitment to increased defense spending, stating, “Other free nations should learn from them, especially many U.S. allies.”

($1 = 31.9490 Taiwan dollars)

($1 = 7.1338 Chinese yuan renminbi)