(Bloomberg) -- Taiwan will spend a record amount on defense next year, boosting its expenditure for eight straight years as it tries to deter an increasingly assertive China.
The cabinet will increase military spending to NT$647 billion ($20.2 billion) next year, an increase of 7.7% from the previous year, according to the budget proposal on Thursday. That accounts for 2.45% of Taiwan’s estimated GDP in 2025, in line with recent years.
Taiwan is beefing up defense spending as it faces growing threats from China, which claims the self-governed island as part of its territory. Beijing has vowed to bring Taiwan under its control someday, by force if necessary. President Xi Jinping has ramped up military and diplomatic pressure on the archipelago in recent years, stoking fears that tensions could erupt into an actual conflict.
Taiwan also wants to demonstrate its commitment to its own security. Premier Cho Jung-tai in July touted the island’s moves to increase defense spending and extend military conscription after former US President Donald Trump said in a Bloomberg Businessweek interview that Taiwan should pay for America’s protection against Chinese military aggression.
The latest budget proposal is the first since President Lai Ching-te took office in May. It’s still subject to approval from the legislature, where the opposition parties jointly hold a slim majority.
That spending also includes a special budget of NT$247.2 billion allocated across seven years until 2026 for procuring new fighter jets, most of which will be supplied by the US.
However, delivery is key. The shipment of US weapons, including warplanes, has been delayed due to software development issues, the official Central News Agency reported, citing the Defense Ministry.
There’s uncertainty whether Taiwan’s military spending can be sustained. The increase over the past few years have been boosted by a special budget, which is financed by public debt. It’s unclear if this mechanism will still be in place after 2026, said Chieh Chung, assistant professor at the Graduate Institute of International Affairs and Strategic Studies, Tamkang University in Taiwan.
“It might be difficult for the current military spending to sustain in the future,” Chieh said.
--With assistance from Josh Xiao.
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