Taiwan has proposed an 18% increase in defence spending for 2027, raising the budget to T$1.1225 trillion — above 3% of GDP and the first time the defence bill would top T$1 trillion. The draft budget includes allocations for veterans and the Coast Guard and reflects Taipei's push to modernise its forces amid near-daily Chinese military activity. President Lai Ching-te has backed the rise, but the proposal faces scrutiny from an opposition-led legislature. Taiwan recently completed its Han Kuang exercises, which practised responses to a possible maritime blockade.
Taiwan Proposes Record 18% Rise In 2027 Defence Budget — T$1.1225 Trillion (~$35.2bn)
An M60A3 tank fires during a live-fire drill as part of the Han Kuang military exercise in Penghu, Taiwan, August 10, 2026. REUTERS/Ann Wang
Taiwan's government has formally proposed an 18% increase in defence spending for 2027, pushing the allocation to T$1.1225 trillion — the first time the figure would top T$1 trillion and equal more than 3% of GDP. At the exchange rate cited in the budget statement (USD 1 = T$31.852), that is roughly $35.2 billion.
Budget Details
The cabinet approved the draft 2027 general budget and released the defence figure as part of that package. The proposal earmarks funding not only for equipment and modernisation, but also for veterans programs and the Coast Guard, which supports the navy in protecting Taiwan's maritime zones and exclusive economic zone.
A Taiwanese military Patriot missile system is deployed in a local park during the annual Han Kuang military exercises in New Taipei City, Taiwan, August 6, 2026. REUTERS/Ann Wang
Strategic Context
The move comes amid sustained pressure from Beijing, which regards democratically governed Taiwan as part of its territory and has stepped up military and political activity around the island in recent years. Taiwan has reported near-daily operations by Chinese forces in surrounding waters and airspace, and Beijing has increased maritime pressure through coastguard "law enforcement" patrols off Taiwan's east coast.
Domestic Politics And International Pressure
President Lai Ching-te has made military modernisation a central policy priority and supported higher defence outlays. Taipei has also faced repeated calls from Washington to shoulder more of its own defence burden, a request Lai has embraced.
Soldiers participate in a defense mission for a critical harbor during the annual Han Kuang military exercises in Yilan, Northeastern Taiwan, Monday, Aug. 10, 2026. Chiang Ying-ying/Pool via REUTERS
However, the government faces a parliament controlled by opposition parties. Lawmakers delayed approval of this year's budget until late last week, and opposition leaders say they will not give the administration open-ended financial backing, though they have reiterated support for stronger defence spending.
Readiness And Capability Building
Taiwan recently concluded its annual Han Kuang exercises, running scenarios that included breaking a potential maritime blockade. The government has pledged to invest in domestic defence capabilities, including plans to develop made-in-Taiwan submarines as part of a broader modernisation push.
China's Defence Ministry dismissed the Han Kuang drills as a "wasteful charade" that "stoked war panic," underscoring the tense rhetoric that accompanies cross-strait military activity.
($1 = 31.8520 Taiwan dollars)
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