Taiwan Increases Defense Spending Amid Growing China Threat

Taiwan is looking to surge its plateauing defense spending with a double-digit increase next year, budget officials said on Thursday, in the weeks after China put on the largest show of force in the Taiwan Strait in nearly 30 years.

The Taiwanese government will earmark $19.41 billion for the military's operational costs and the purchase of hardware in 2023, including fulfilling orders for U.S.-made fighter aircraft, the Executive Yuan, President Tsai Ing-wen's cabinet, said at a press conference.

The amount, a record high, is a year-on-year increase of 13.9 percent—about 2.4 percent of the island's projected GDP—and includes a $3.58 billion special budget for defense equipment, as well as an additional discretionary fund. Past rises in defense spending have fallen within single digits, mostly under 5 percent.

Officials with the central government's Directorate-General of Budget, Accounting and Statistics said defense matters would account for just under 15 percent of Taiwan's total expenditure next year, behind social welfare, education and economic development.

Taiwan Raises Defense Budget By 13 Percent
Above, a Taiwan air force F-5 fighter aircraft takes off from Chihhang Air Base on August 06, 2022, in Taitung, Taiwan. Taiwan’s cabinet proposed a 13 percent increase in defense spending for the fiscal year 2023, the first double-digit increase in recent years. Annabelle Chih/Getty Images

The budget proposal will require sign-off from Taiwan's parliament, where Tsai's Democratic Progressive Party holds a comfortable majority of seats. It's also not unlikely that Taiwan's Defense Ministry will seek another special budget, as was the case this year.

Statistics Minister Chu Tzer-ming told reporters that much of the budget would go to maintaining the operations of Taiwan's armed forces: "Warplanes need to take off and warships put out to sea. These lead to higher expenses."

Although Thursday's cabinet announcement lacked specific details about where the extra funds would go, Taiwan's Defense Ministry said the budget would help propel the island's indigenous fighter- and shipbuilding projects. It would also be used to improve Taiwan's reserve forces and develop asymmetric warfighting capabilities.

Taiwan's order of F-16V Fighting Falcons, approved by the Trump administration, is also expected to be fulfilled by the budget, as are orders for domestically produced anti-ship missiles.

"The national defense budget must take into account the present enemy threat, the military operational needs, plans for force maintenance and buildup, and the government's finances," the ministry said.

Taipei's annual defense spending of above 2 percent is on par with NATO standards, but, given the nature of the threat from Beijing, which claims the island as its own, Taiwan has been advised to raise it above 3 percent.

Defense planners in Washington also want the island to pursue asymmetric warfare, purchasing cheaper, mobile but lethal weaponry to counter vulnerabilities in China's forces.

Taiwan's military has been monitoring several weeks of intense Chinese military movements in its surrounding sea and airspace after Beijing stepped up its drills in response to House Speaker Nancy Pelosi's recent visit.

Even with its record defense spending, Taiwan's budget is still about 20 times smaller than that of China's, which set its 2022 budget at $211.6 billion, itself a 7.1 percent rise from last year.

Hsiao Bi-khim, Taiwan's de facto ambassador to the United States, told CBS's Face the Nation earlier this month: "The way we see the threat, it involves two parts: capabilities and intentions. We work on intentions by communicating reason and rationality, and we deal with capabilities by also fortifying our own deterrence.

"We do not intend, nor are we able to engage in an arms race with China, but we are going to be smart and asymmetrical about our own capabilities," she said. "That, ultimately, in cooperation with other shareholders in the region, is to deter an actual invasion from happening."