TAIPEI (TVBS News) — Taiwan's defense budget will exceed NT$1.1 trillion (around US$34 billion) for the first time next year, President Lai Ching-te (賴清德) announced Monday (Aug. 17). The historic spending increase, which Lai framed as "investing in peace," comes as China intensifies military pressure and U.S. commitment to regional allies faces new questions.
The 2027 defense budget will reach NT$1.1225 trillion, continuing to exceed 3 percent of gross domestic product, Lai said during a budget briefing at the Presidential Office. Taiwan's cabinet, the Executive Yuan (行政院), will formally unveil the full budget breakdown on Thursday.
"Investing in defense is investing in peace," Lai said. "We will continue to build a more solid defense force to maintain peace and stability in the Taiwan Strait and the region."
The announcement marks a significant milestone for Taiwan's military modernization efforts. Central government budget expenditures have doubled over the past decade. Spending rose from approximately NT$1.9 trillion in 2016 to NT$3.9266 trillion next year, according to the Presidential Office.
The budget increase comes amid intensifying Chinese military activity around Taiwan. China's military operates almost daily in the waters and skies surrounding the island. Beijing has also expanded coast guard "law enforcement" patrols off Taiwan's east coast in the Pacific Ocean.
Taiwan finished its annual Han Kuang (漢光) military drills last week, simulating battle scenarios including how to break a potential Chinese maritime blockade. China's Defense Ministry called the exercises a "wasteful charade" that "stoked war panic."
The defense budget announcement comes on the same day that U.S.-South Korea joint military exercises began under a cloud of uncertainty. President Donald Trump announced Sunday on Truth Social that the United States would "substantially reduce" the drills. He cited costs and his "very good relationship" with North Korean leader Kim Jong Un.
"These exercises are not only costly, with much of these costs paid for by the United States of America (as usual!), but send a signal that is totally inappropriate and hostile," Trump posted.
The annual Ulchi Freedom Shield exercises, an 11-day event with about 18,000 South Korean soldiers participating, proceeded Monday despite Trump's comments. Seoul said it was reviewing the U.S. president's remarks while hoping a favorable relationship between Washington and Pyongyang could lead to meaningful talks.
Taiwan also faces calls from Washington to spend more on its own defense, mirroring U.S. pressure on European allies. Lai has embraced this approach, with the new budget maintaining defense spending above 3 percent of GDP.
However, Lai faces domestic challenges to his defense agenda. Taiwan's opposition-dominated parliament, the Legislative Yuan (立法院), only passed this year's budget late Friday after months of delays. The two main opposition parties have said they will not write blank checks for the government.
The opposition-controlled legislature earlier this year slashed NT$470 billion (around US$14.6 billion) from an eight-year defense special act proposed by the Executive Yuan. The original NT$1.25 trillion (around US$38.9 billion) proposal was reduced to NT$780 billion (around US$24.3 billion). The government plans to restore the cut funding through annual budgets and supplementary appropriations, according to informed sources cited by the Liberty Times.
Details of how the NT$1.1225 trillion defense budget will be allocated between annual spending and special appropriations were not immediately available. The cabinet is expected to provide a full breakdown when it formally presents the 2027 budget Thursday. ◼ (At time of reporting, US$1 equals approximately NT$32.11)