A record Taiwan defense budget took center stage on Saturday, Oct. 10, when President Lai Ching-te used his National Day address outside the Presidential Office in Taipei to say the spending increase is meant “to deter war,” not to provoke China. Beijing’s Taiwan Affairs Office answered within hours, calling the speech a distortion of the facts.
Lai’s government has set aside NT$1.1 trillion, about $34.5 billion, for defense in 2027, which is more than 3% of the island’s gross domestic product, according to Al Jazeera and DW. The speech came as China keeps up military pressure around the island, including the activity described in our report on a Chinese militia boat off Taiwan’s east coast.
What Lai said on National Day
“Our aim by increasing investment in national defense is not to provoke; rather, it is to deter war,” Lai said, according to the official English text published by Focus Taiwan. “And we are strengthening our self-defense not to abandon dialogue, but to ensure that dialogue can take place on the basis of parity and dignity.” He also said Taiwan is “open to exchanges but will not accept subordination.”
Lai said China “continues to apply pressure through military and gray-zone activities in an attempt to alter the status quo across the Taiwan Strait.” He framed Taiwan’s resolve as a test of “whether the international community still believes that force cannot override rules.” He welcomed the United States and China managing their competition through dialogue, but said any lasting stability requires “respect for the right of the people of Taiwan to exist” and “no tolerance for distorting the history of World War II.”
Where the Taiwan defense budget money goes
In the speech, Lai said Taiwan would keep reforming its armed forces, “strengthen our asymmetric capabilities,” and build up domestic defense industries by turning the island’s strengths in semiconductors, information and communications technology and precision manufacturing into military capacity. He also cited the government’s “whole-of-society defense resilience” preparations as part of the same effort.
The budget also sits inside a larger arms relationship with Washington. Taiwan is waiting on President Donald Trump’s approval of about $14 billion in U.S. weapons sales, including the Patriot air defense system, Al Jazeera reported. DW noted that the spending push follows Trump’s call for Taiwan to pay for U.S. protection. In December, news of an $11 billion U.S. arms package, the largest ever for the island, was followed by Chinese military drills near Taiwan.
Beijing’s response
Zhang Han, spokesperson for China’s State Council Taiwan Affairs Office, said in a statement posted on the office’s website (a Chinese government source) that Lai’s speech “disregards facts, distorts the truth, misleads the public, and reveals ulterior motives.” China’s state broadcaster CGTN reported that Zhang accused Lai of clinging to “Taiwan independence” thinking, exaggerating the “threat from the mainland” and promoting what Beijing calls a false “democracy versus authoritarianism” narrative.
The statement repeated Beijing’s position that “there is only one China in the world, and Taiwan is part of China,” and said China would keep to the one-China principle and the “1992 Consensus” while opposing “external interference.” Beijing has never ruled out using force to bring Taiwan under its control and has rejected Lai’s offers of talks.
Washington’s reaction and the risk of drills
A senior U.S. administration official welcomed Lai’s commitment to peace and stability across the strait and, referring to China, said that “a routine speech is no justification for aggressive or coercive actions,” DW reported. That line reflects past patterns: China staged war games around Taiwan shortly after Lai’s first National Day speech in 2024, though not after last year’s address, according to Al Jazeera.
Whether Beijing answers this year’s speech with drills, and whether the pending $14 billion arms package moves forward, are the next markers to watch. Both will play out against wider U.S.-China bargaining, covered in our explainer on the US-China 30-for-30 tariff deal, and rising friction elsewhere in the region, as seen in the recent Philippines-China incidents in the South China Sea.
Sources
- Focus Taiwan: Full text of President Lai Ching-te’s National Day address
- Al Jazeera: Taiwan president says defence spending boost aims to “deter war”
- DW: Taiwan to boost military spending to “deter war” with China
- Taiwan Affairs Office of China’s State Council (Chinese government source): spokesperson statement on Lai’s speech
- CGTN (Chinese state media): Mainland says Lai’s speech disregards facts