Taiwan announces $40 billion budget for arms purchases as US pressures island to increase defense spending

Taiwan President Lai Ching-te announced a $40 billion budget for arms purchases on Wednesday. Plans include building an air defense system with high-end detection and interception capabilities called Taiwan Dome, as the United States pressures the island to increase its defense spending.

According to the leader, this budget will be allocated over eight years, from 2026 to 2033, and comes after Lai already committed to raising defense spending to 5% of the island’s GDP, as part of his strategy against threats of invasion from China.

“China’s threats to Taiwan and the Indo-Pacific region are increasing,” Lai said Wednesday. “Recently, various types of military intrusions, maritime gray zones and disinformation campaigns have occurred in Japan, the Philippines and around the Taiwan Strait, causing deep unrest and distress to all parties in the region.”

“Taiwan, as the most important and critical part of the first island chain, must demonstrate our determination and take greater responsibility for self-defense,” he said, referring to the island chain stretching from Japan’s East China Sea to the Philippines in the Pacific Ocean.

Last week, Japan said that scrambled planes after detecting a suspected Chinese drone near its southern island of Yonaguni, near Taiwan.

Currently, Taiwan has set an increase in its defense budget to 3.3% of its GDP by 2026, allocating 949.5 billion Taiwan dollars ($31.18 billion). President Donald Trump has demanded Taiwan increase its defense spending to 10% of GDP, a proportion far above what the United States or any of its main allies spend.

The US State Department said Wednesday that it welcomes Taiwan’s budget announcement and “supports Taiwan’s acquisition of critical defense capabilities commensurate with the threat it faces.”

He also said he welcomes the Lai administration’s commitments to increase defense spending to at least 5% of GDP by 2030, “demonstrating the determination to strengthen Taiwan’s self-defense capabilities.”

Taiwan, a self-governing island, is claimed by China. In recent years, China has daily deployed fighter jets, navigation ships and drones to the island in military exercises as part of its pressure efforts.

Wellington Koo, Taiwan’s defense minister, said Wednesday that the $40 billion is an upper limit for the special budget and will be used to purchase precision strike missiles and work toward joint Taiwan-U.S. development and procurement of equipment and systems.

Lai also said his government would focus on finding ways to increase its defense against Beijing’s “psychological warfare” as China tries to “weaken our unity.” He said the government will monitor and increase public awareness about China’s interference attempts during major events and elections.