TAIPEI — Taiwan is preparing to spend more than NT$1 trillion (about US$35.2 billion) on defence in 2027, marking a historic escalation in military spending as President Lai Ching-te seeks to strengthen the island’s ability to deter a potential Chinese attack.
Lai announced on Aug. 17 that Taiwan’s proposed 2027 defence budget will reach NT$1.1225 trillion, including both the regular defence allocation and special funding. The figure would push defence spending above 3% of Taiwan’s gross domestic product (GDP) for the first time at this scale.
Lai described the increase as an investment in peace and said Taiwan would continue strengthening its military capabilities to preserve stability across the Taiwan Strait.
But behind the headline number is a much larger strategic question: how far will Taiwan go — and how much will its parliament ultimately approve?
A historic jump in Taiwan’s military spending
The proposed NT$1.1225 trillion package represents a major increase in Taiwan’s defence commitment. Reuters reported that the 2027 defence allocation is expected to rise by roughly 16% from the previous year.
Taiwan has been steadily increasing military spending as Beijing expands military and political pressure around the island.
Taipei says its defence strategy increasingly focuses on smaller, mobile and asymmetric capabilities designed to make a Chinese attack more difficult and costly. That includes drones and other systems intended to improve Taiwan’s ability to survive and fight against a much larger military.
Taiwan’s Defence Ministry has previously stated that it is targeting defence spending of at least 3% of GDP, while President Lai has outlined an ambition to reach 5% of GDP by 2030.
China remains at the centre of the calculation
The spending increase comes as China continues military activity around Taiwan.
Beijing claims Taiwan as part of its territory and has not renounced the use of force to bring the island under its control. Taiwan rejects Beijing’s sovereignty claim and has accelerated preparations for potential conflict.
Reuters reported that Chinese military forces operate almost daily around Taiwan, while Chinese coast guard vessels have also conducted patrols near the island’s eastern approaches. Taiwanese defence researchers have warned that activity on the east coast could serve not only as psychological pressure but also as training and intelligence gathering.
That eastern flank is particularly significant because it provides Taiwan with access to the wider Pacific Ocean.
Taiwan’s latest war games offer a glimpse of the strategy
The announcement also comes immediately after Taiwan completed its annual Han Kuang military exercises, which this year simulated a range of scenarios involving a potential Chinese attack.
The drills included preparations for dealing with a possible Chinese maritime blockade, alongside broader military and civilian resilience exercises.
Taiwan also conducted exercises involving communications disruptions and civilian emergency preparedness. Reuters reported that the drills were designed to test how Taiwan’s government, military and population could continue functioning under wartime conditions.
China sharply criticised the exercises, calling them a “wasteful charade” and accusing Taipei of increasing tensions.
The message from Taipei, however, is increasingly clear: deterrence depends not only on weapons, but on whether Taiwan can continue operating under pressure.
Drones, submarines and asymmetric warfare
One of Taiwan’s major defence priorities is building capabilities that can offset China’s overwhelming numerical advantage.
That includes drones, missile systems, surveillance capabilities and domestically developed military equipment.
Taiwan has also been developing its own submarine capability as part of a broader effort to strengthen its ability to defend the island and maintain access to the sea during a crisis.
The emphasis on asymmetric warfare reflects a basic reality: Taiwan cannot realistically match China platform-for-platform.
Instead, the strategy is to create enough mobile, dispersed and survivable forces to make any attack extremely difficult.
The political battle may be just as important as the military one
The proposed record budget still faces a major obstacle — Taiwan’s opposition-controlled parliament.
Lai’s Democratic Progressive Party does not control a legislative majority. The main opposition parties, including the Kuomintang and Taiwan People’s Party, have repeatedly challenged government spending plans and demanded greater scrutiny of defence expenditure.
That conflict was already visible in the approval of Taiwan’s 2026 budget.
Parliament approved the 2026 government budget only on Aug. 14, after an unprecedented delay. Lawmakers cut NT$48 billion from the original NT$3.034 trillion proposal, while funding for a major drone programme was retained.
The delay means the 2027 defence proposal enters parliament under an unusually intense political spotlight.
Lai’s government argues that Taiwan faces an increasingly serious security environment. Opposition lawmakers, meanwhile, have argued that defence spending must be subjected to proper legislative oversight rather than receiving automatic approval.
Washington is also watching
Taiwan’s decision comes amid growing pressure from Washington for allies and partners to shoulder more of their own defence burden.
Lai has embraced the push for higher military spending, linking stronger Taiwanese capabilities to the island’s ability to deter conflict and maintain stability.
The proposed increase therefore carries significance beyond Taiwan itself.
A stronger Taiwanese military could affect calculations in Washington, Beijing, Tokyo and across the wider Indo-Pacific, particularly because any major conflict in the Taiwan Strait could have consequences for regional trade, shipping, semiconductor supply chains and security.
What happens next?
Taiwan’s Cabinet is expected to formally present the 2027 budget on Aug. 20, including more details on how the defence allocation will be spent. Parliament is then expected to scrutinise the proposal later this month.
That means the NT$1.1225 trillion figure announced by Lai is a proposed spending level, not a final approved budget.
And that may be the most important part of the story.
Taiwan is signalling that it intends to spend at unprecedented levels to strengthen its defences. China is continuing military pressure around the island. Washington wants greater regional burden-sharing. And Taiwan’s own parliament remains divided over how much money should be committed to defence.
The number is now on the table. The real battle over Taiwan’s 2027 defence strategy is about to begin in parliament.
Leave a Reply