Taiwan has unveiled a landmark US$ 40 billion special defence budget — the largest in recent history — as part of an eight-year plan aimed at deterring what the government calls China’s “intensifying” military and political pressure on the island.
The announcement was made on 26 November 2025 by Lai Ching‑te, President of Taiwan, following a security council briefing. He described the additional funds as essential to safeguard Taiwan’s sovereignty, democracy, and freedom in the face of escalating threats from People’s Republic of China.
What the money will be spent on
The expanded budget — proposed for the period 2026–2033 — will go toward:
- Large-scale procurement of U.S. arms.
- Development of asymmetric defence capabilities, including precision-strike missiles, drones, and electronic or cyber defence.
- Construction of a multi-layered missile and air-defence system dubbed the T‑Dome, intended to detect and intercept threats such as missiles, aircraft, and drones — a Taiwanese equivalent to Israel’s Iron Dome.
- Upgrades to existing military procurement and readiness, plus improved defence posture and response capabilities by 2027.
If implemented, Taiwan’s overall defence spending would rise from about 3.3 % of GDP in 2026 to a target of 5 % by 2030 — levels unmatched in decades.
Why now: a response to rising pressure
Taipei’s decision comes against a backdrop of increasing pressure from Beijing — including regular air-defence zone incursions, naval manoeuvres, and growing political coercion — as well as shifting regional security dynamics.
President Lai stressed that the move was not about declaring independence but about defending “democratic Taiwan” and rejecting external coercion — particularly Beijing’s “one country, two systems” formula, which he labelled a non-starter.
U.S. officials welcomed the announcement. The head of the U.S. de facto embassy in Taipei called the move “a major step toward maintaining peace and stability across the Taiwan Strait by strengthening deterrence.”
Domestic and international hurdles
Despite broad consensus among many in Taiwan about the need for stronger defences, the plan faces political headwinds. The country’s opposition party, the Kuomintang (KMT), which controls the legislature’s purse strings, has previously voiced scepticism about massive defence increases.
The government insists the spending isn’t tied to recent trade negotiations or external pressure, but to concrete security realities.
On the international stage, Beijing has criticised the decision, warning that heavy military spending “on foreign weapons and external influence” will destabilise the region and jeopardise Taiwan’s economy.
What it means for regional stability
- Taiwan’s shift toward asymmetric warfare — missiles, drones, air-defence, cyber — signals a move away from trying to match China ship-for-ship or plane-for-plane, instead focusing on deterrence through cost-imposition.
- The build-up could deepen ties with allies, particularly the United States Department of Defense and its Indo-Pacific partners, as Taipei seeks more weapons sales and joint development.
- But it may also raise tensions — increasing the risk of miscalculation or escalation, especially if China views the build-up as a provocation.
- For Taiwanese civilians, the plan underlines that security is becoming a long-term national priority; alongside this comes economic and social trade-offs as military spending competes with public services and development.
Final word
With its US$ 40 billion defence budget boost, Taiwan is making a clear strategic statement: it is preparing not for a cold war only, but for a long-term posture of deterrence. Whether this gamble reduces the risk of conflict — or makes war more likely — will depend not only on weapons, but diplomacy, alliances, and resolve.
