TAIPEI – Taiwan’s defense budget is set to rise by 7.7% next year, surpassing the island’s expected economic growth rate, as Taipei ramps up efforts to bolster its military capabilities in response to escalating threats from China.
Following a cabinet meeting, it was announced that Taiwan’s defense spending for 2025 will reach T$647 billion (US$20.25 billion), accounting for 2.45% of the country’s gross domestic product (GDP), up from 2.38% this year. This increase outpaces the government’s projected economic growth rate of 3.26% for the year.
The budget includes a special allocation of T$90.4 billion for new fighter jets and enhanced missile production. This spending is part of the military’s extra T$240 billion allocation announced in 2021, spread over five years.
“We will not join in an arms race with other countries. We will increase (spending) steadily according to our needs,” said Hsieh Chi-hsien, head of the defense ministry’s comptroller bureau.
Taiwan has made military modernization a core policy priority in light of China’s growing military and political pressure. The government has pledged to spend more on defense, including investing in locally produced submarines.
China continues to increase its own military capabilities, with a 7.2% rise in defense spending for 2024, totaling 1.67 trillion yuan (US$234.10 billion), outpacing its economic growth target of around 5%.
Taiwan’s defense budget still needs to be approved by parliament, where the ruling Democratic Progressive Party (DPP) recently lost its majority. However, the main opposition party, the Kuomintang, has expressed support for strengthening Taiwan’s defense capabilities.
Despite the lack of diplomatic relations, the United States remains Taiwan’s most important arms supplier and international ally. Nikki Haley, former U.S. ambassador to the United Nations, praised Taiwan’s increased defense spending at a security forum in Taipei, urging other nations to follow suit.