CHRISTCHURCH, New Zealand — Taiwan’s Cabinet, the Executive Yuan, this week ratified a record defense budget of NT$647 billion, or US$20.2 billion, meant to help defend Taiwan against the prospect of a Chinese invasion.
The spending decision comes as Chinese forces continue their prodding of the island, which Beijing views as a rogue province. As of Aug. 22, People’s Liberation Army intrusions into Taiwan’s air defense identification zone – 1,739 incidents in 2024 – had already reached an annual record.
Taiwan’s defense expenditures in 2025 will represent a 7.7% increase if lawmakers approve the proposal later this month. The country’s Central News Agency said the allocation represent 2.45% of GDP, almost identical to this year’s.
President Lai Ching-te’s election campaign promised that defense spending would reach 3% of GDP. Lt Gen. Hsieh Chi-hsien, head of the Ministry of National Defense’s Comptroller Bureau, told a press conference that increasing spending to that level remained a goal.
“However, we must still compile the defense budget based on weapons needed to shore up our defenses. We also need to take into account the nation’s financial situation,” he said.
Asked whether the envisioned 2025 spending would be sufficient, Rupert Hammond-Chambers, President of the US-Taiwan Business Council, told Defense News: “Answering this question is highly subjective. Should Taiwan be commended for increasing its defense budget by 7.7%? Absolutely. It’s real growth with new resources to address the threat from China.”
At the same time, Hammond-Chambers said more will be needed. “Taiwan needs to continue to grow its defense budget in real terms, surpassing 3% of GDP and higher in the near term.”
According to Hsieh, the coming defense budget comprises NT$181.5 billion for personnel expenses, and NT$148.7 billion for equipment maintenance. Procurements are set to increase by 16% to NT$145.8 billion in 2025, with payments due for American equipment.
Some NT$90.4 billion is earmarked as part of a five-year, special budget worth NT$240 billion that was announced in 2021 to purchase items like F-16V fighters and missiles.
“We’re determined to boost self-defense and deepen cooperation with democratic partners in a bid to ensure peace and prosperity,” Lai said.
According to Hammond-Chambers, Taiwan is making “good progress” in key areas of domestic weapons production, like missiles, drones and shipbuilding.
“Overall, the mix of platforms and systems between foreign-procured and domestically developed is healthy, and receives strong support from the Lai and Biden governments,” he said, referring to U.S. President Joe Biden.
“The time it takes to deliver weapons from American factories remains a challenge,” he noted. “That said, the weapons presently queued for delivery should be delivered to Taiwan in the next 18-24 months, and we’ll see a substantial drop in the amount and value of the equipment presently undelivered. This should open up Taiwan’s defense budget for a new phase of procurement.”
Gordon Arthur is an Asia correspondent for Defense News. After a 20-year stint working in Hong Kong, he now resides in New Zealand. He has attended military exercises and defense exhibitions in about 20 countries around the Asia-Pacific region.
