- On Thursday, Taiwan's cabinet approved a record defense budget of T$1.1225 trillion ($35.2 billion) for 2027, marking an 18% increase and the first time it exceeds NT$1 trillion.
- The proposed budget includes funds for drones, missiles, veterans, and the Coast Guard, and would increase defense spending to 3.93% of 2025 GDP, up from 3.23% this year.
- This budget is viewed as a signal to the U.S. and China, especially as President Trump has withheld approval of a $14 billion arms package, referring to it as a 'very good negotiating chip' with China.
- In May, Taiwan's parliament approved $25 billion for defense, which was only two-thirds of what the government had requested, and it excluded funding for drones and missiles.
- Military modernization has become a key policy platform for Taiwan's government, which has pledged to increase defense spending amid rising threats from China.
- The Chinese leader is expected to visit the White House in September, which may increase pressure on President Trump to delay arms sales to Taiwan.
Taiwan's government has proposed a historic defense budget of T$1.1225 trillion (approximately $35.2 billion) for 2027, marking an 18% increase from the previous year.12
This budget is the first to surpass the symbolic NT$1 trillion threshold and represents about 3.93% of Taiwan's projected GDP for 2025, up from 3.23% this year.
Hsieh Chi-hsien, head of the defense ministry's comptroller bureau, indicated that the budget includes significant allocations for drones and missiles, which had previously faced parliamentary hurdles.7
The proposed budget is part of Taiwan's broader strategy to modernize its military in response to increasing threats from China, which views Taiwan as a breakaway province.
The budget also includes provisions for veterans and the Coast Guard, which plays a crucial role in maritime defense.
The Taiwanese government aims to make any potential invasion by China too costly, thereby deterring aggression.
The budget sends a clear message to both the U.S. and China about Taiwan's commitment to self-defense and its readiness to procure more U.S. arms, despite previous delays in arms sales due to political negotiations.
As Taiwan prepares for potential diplomatic meetings between U.S. and Chinese leaders, this budget underscores its determination to bolster its defenses against a backdrop of rising military pressure from Beijing.
“The proposed budget, at 3.93% of GDP, marks the first time Taiwan's defense spending exceeds NT$1 trillion, with funds for drones and missiles that previously lacked parliamentary approval. President Trump has withheld approval of a $14 billion arms package, calling it 'a very good negotiating chip' with China, ahead of a September White House visit by the Chinese leader.”
WSJ
