Taiwan unveils historic $40 billion defence budget to deter China

Taiwan is preparing a supplementary budget of 1.25 trillion New Taiwan dollars ($40 billion US dollars) to cover the next eight years, which President Lai Ching-te said underscores the island's commitment to safeguarding its democracy.

"Investing in defence is investing in security and in peace," Lai said at a press conference on Wednesday.

Lai said that as China steps up military pressure, democratic Indo-Pacific countries - including Japan, South Korea, the Philippines and Australia - are forming a consensus on "island-chain defence and shared responsibility," increasing defence spending to counter Chinese threats.

The president added that Taiwan intends to use the funds planned for 2026-2033 to finance new weapons purchases from the United States and to strengthen its asymmetric defence capabilities.

China regards the democratically governed island, which has been self-ruled for decades, as part of its territory and seeks to bring Taiwan under its control - if necessary by military means.

Lai wrote in a Washington Post column, published on Tuesday, that Taiwan's defence spending is expected to rise to 3.3% of gross domestic product (GDP) by 2026, with a long-term goal of increasing it to 5% by 2030 - which he described as the largest sustained military investment in Taiwan's modern history.

The spending plan must still be approved by parliament, which is currently dominated by the opposition, especially the China-friendly Kuomintang.

US President Donald Trump's administration has called on Taiwan to invest more in its own military.

The American Institute in Taiwan (AIT), the de facto US embassy in Taipei, said on Wednesday that it welcomed Lai's announcement on the defence budget.

"Taiwan joins partners from across Europe to Japan and Korea that are making critical defence investments necessary to deter unprecedented challenges to global peace and prosperity," AIT director Raymond Greene said.

In Beijing, Chinese Foreign Ministry spokeswoman Mao Ning said on Wednesday that Taiwan's military resistance to "reunification" would not succeed.

Tensions are high in the region not only over Taiwan itself, but also following a diplomatic escalation between China and Japan. Earlier this month, Japanese Prime Minister Sanae Takaichi said that a Chinese attack on Taiwan would be an "existential crisis" that could lead Japan to exercise its right to self-defence.

Beijing has demanded that Takaichi retract her statements.

Further tension arose from a plan announced on Sunday for Japan to deploy missiles on Yonaguni, Japan's southwesternmost island, located about 110 kilometres from Taiwan.