TAIPEI—Taiwan's Cabinet will propose a 16 percent increase in defense spending for 2027, pushing the total budget past NT$1 trillion for the first time in the island's history, the official Central News Agency reported. The proposal, to be formally unveiled at a Cabinet meeting on Aug. 20, would bring the total to more than NT$1.1 trillion—equivalent to more than $31 billion.
The figure represents more than 3 percent of gross domestic product, putting Taiwan in line with NATO spending targets that the United States has pressed both European allies and Indo-Pacific partners to meet. President Lai Ching-te has pushed for higher military outlays, citing China's sustained military pressure as the driving justification.
Lai watched drills in the northern city of Taoyuan on Sunday as Taiwan conducted its annual Han Kuang military exercises. "Every bit of solid preparation in peacetime adds another measure of stability and strength for our nation," he said.
China's military operates almost daily around Taiwan by sea and air, and has held periodic large-scale war games—the most recent in late December. Beijing views democratically governed Taiwan as its own territory and has intensified military and political pressure in recent years. China refuses to engage with Lai, calling him a "separatist." Lai has said only Taiwan's people can decide Taiwan's future.
China is also in the midst of a sustained military buildup. In March, Beijing announced a 7 percent rise in its 2026 defense budget, bringing its total to 1.91 trillion yuan—a figure that dwarfs Taiwan's proposed outlays and forms part of a modernization program that includes new aircraft carriers, stealth fighter jets and missiles.
The proposed Taiwanese budget includes funding for the coast guard, veterans affairs and special projects—not just the conventional military—according to the Central News Agency. Final detailed figures await the Aug. 20 Cabinet meeting.
Taiwan's government has made military modernization a central policy priority in recent years, including a program to develop domestically built submarines. Strong economic growth, partly driven by AI-related semiconductor revenue, has given the government additional fiscal room to expand defense spending without cutting other priorities.
The proposal is expected to face resistance in the legislature, which opposition parties control. Taiwan's parliament has previously challenged or modified executive defense budget requests, and the scale of the 16 percent increase—the largest proposed in recent memory—makes legislative friction likely. No date for a legislative vote has been announced.
Washington's pressure on Taiwan to spend more mirrors the posture the Trump administration has taken with NATO members, several of whom have announced their own record defense budgets this year. Taiwan's willingness to cross the 3 percent of GDP threshold puts it ahead of most NATO members in defense spending relative to economic output.
