TAIPEI (Taiwan News) — Increasing Chinese aggression toward Taiwan over the past two years has been the primary driver for the nation to ramp up its defense budget.
Frequent Chinese military drills in the region and incursions into Taiwan’s air defense identification zone (ADIZ) have become too significant to ignore. From 2019 to 2023, Taiwan’s defense spending increased by an average of approximately 5% per year, according to a US Congressional Research Service report. As a percentage of GDP, it rose from 2% to 2.5%.
The US and global defense experts have, for decades, urged Taiwan to boost its defense budget to 3% of its GDP.
2023 domestic projects
After China’s unprecedented large-scale military exercises in August 2022 following then-House Speaker Nancy Pelosi’s visit, Taiwan allocated NT$580.3 billion (US$17.85 billion) for defense in 2023. This budget aimed to cover various military projects and multiple US arms procurements.
In June 2023, Taiwan began constructing its first of two light frigates. The first is outfitted for air defense, while the second will be equipped for anti-submarine operations. Both ships are slated for completion by 2026 at a cost of NT$24.55 billion.
The Kengzikou tank proving ground in Hsinchu underwent upgrades to prepare for the arrival of new M1A2T Abrams tanks. The NT$1.19 billion project includes an extended 1,800-meter firing range featuring both fixed and mobile targets.
Taiwan also mass-produced over 1,000 missiles to bolster its air defense and anti-ship capabilities. The National Chung Shan Institute of Science and Technology (NCSIST) operates 16 production lines for weapons such as the Chien Hsiang suicide drone, Wan Chien missile, Hsiung Sheng missile, Sky Bow III missile, and various Sky Sword II missile variants (ground-launched, ship-launched, and extended-range air-launched). Production also included Hsiung Feng III missiles and their extended-range versions. NCSIST’s total operating revenue for 2023 was projected to reach approximately NT$120 billion.
2023 US arms sales
The US approved three major weapons packages for Taiwan in 2023. In March, Taiwan was offered 100 AGM-88B High-Speed Anti-Radiation Missiles and 200 AIM-120C-8 Advanced Medium-Range Air-to-Air Missiles for NT$20.12 billion.
In August, an NT$16.25 billion package for F-16 infrared search-and-track systems was approved. In December, the US authorized a NT$9.75 billion deal for Command, Control, Communications, and Computers Life Cycle Support.
Chinese aggression in 2023
On April 1, then-President Tsai Ing-wen (蔡英文) embarked on a diplomatic trip to Taiwan’s Central American allies, Belize and Guatemala. Her itinerary included layovers in New York and Los Angeles, where she met US House Speaker Kevin McCarthy. Discussions focused on streamlining weapons deliveries to Taiwan, according to Reuters.
"We must continue the arms sales to Taiwan and make sure such sales reach Taiwan on a very timely basis," McCarthy said, emphasizing the need for closer economic cooperation between the two countries.
In response to Tsai's high-profile meeting, China launched the “United Sharp Sword” exercise, which lasted three days. From April 8–10, the PLA Eastern Theater Command organized combat readiness patrols and drills in the Taiwan Strait, as well as air and sea operations around northern, southern, and eastern Taiwan.
The exercises tested the PLA’s capability to seize control of sea, air, and information around Taiwan. PLA Navy frigates and destroyers conducted mock short-range assaults, long-range deterrence, and anti-missile drills, while military units carried out simulated joint precision strikes and area denial maneuvers.
Throughout 2023, 1,709 Chinese military aircraft entered Taiwan’s ADIZ, according to a dataset compiled by ChinaPower at the Center for Strategic and International Studies (CSIS). Beijing also dispatched numerous naval ships around Taiwan as part of its “gray zone” tactics aimed at wearing down Taiwan’s military readiness.
Gray zone tactics are defined as “an effort or series of efforts beyond steady-state deterrence and assurance that attempts to achieve one’s security objectives without resort to direct and sizable use of force.”
2024 domestic projects
Having seen China’s expanded drills in the area, Taiwan's Cabinet approved NT$606.8 billion for defense in 2024. This marked a 4.6% increase from the previous year and accounted for approximately 2.5% of the nation's GDP.
Construction of the second light frigate began in January. This variant is outfitted with canister missile launchers and will have a towed array sonar for anti-submarine warfare. Taiwan plans to build a fleet of 10 light frigates to perform reconnaissance and surveillance operations in the Taiwan Strait, escort transport ships to outlying islands, maintain the safety of maritime traffic lines, and support military exercises and training.
The second batch of Tuo Chiang-class corvettes is expected to be completed and launched by 2026, according to the Ministry of National Defense. Taiwan also continued production of five additional Tuo Chiang-class corvettes, which began in the first half of this year. This batch of ships is projected for completion by 2026. Once delivered, Taiwan’s Navy will operate 12 Tuo Chiang-class corvettes in total, including the prototype ship.
Together with the Coast Guard Administration’s 12 Anping-class patrol vessels, which are based on the Tuo Chiang design, these ships will significantly boost Taiwan’s asymmetric warfare capabilities.
To enhance air defense, four missile bases are under construction around Taiwan. The bases in Pingtung and Kaohsiung will cost NT$1.86 billion, while those in Tainan and Taitung are budgeted at NT$1.61 billion and NT$1.57 billion, respectively. The Kaohsiung base is expected to be completed first, in late 2025 or early 2026, and will house land-based Harpoon missiles.
2024 US arms sales
This year, the US approved four major arms sales to Taiwan:
- June: F-16 spare parts were offered for NT$7.15 billion.
- June: A package of ALTIUS 600M-V unmanned aerial vehicles and Switchblade drones was approved for NT$11.71 billion.
- October: Three National Advanced Surface-to-Air Missile Systems and 123 Advanced Medium-Range Air-to-Air Missiles-Extended Range were greenlighted for NT$37.73 billion.
- November: A potential sale of F-16 spare parts and active electronically scanned array radars was valued at NT$10.4 billion.
2024 Chinese aggression
On May 23, days after Lai Ching-te’s (賴清德) inauguration, the Chinese military launched its two-day Joint Sword A exercise around Taiwan, including its outlying islands. Chinese fighter jets armed with live ammunition simulated strikes against high-value targets, while destroyers and missile boats were also deployed.
China’s Eastern Theater Command spokesperson Li Xi (李熹) described the drills as “a strong punishment for the separatist acts of Taiwan independence forces and a serious warning against interference and provocation by external forces.”
On Oct. 14, China carried out another large-scale military exercise, Joint Sword-2024B, following Taiwan’s National Day celebrations. PLA Navy ships and military aircraft performed joint missions focused on sea-air combat readiness, blockading key ports and areas, and assaulting maritime and ground targets.
China’s Eastern Theater Command claimed the exercises were a “legitimate and necessary operation for safeguarding state sovereignty and national unity.”
On Dec. 10, China deployed its largest fleet in years near Taiwan and neighboring countries for drills. Approximately 90 navy and coast guard vessels operated in the region, responding to Lai’s trip to South Pacific allies, which included layovers in Hawaii and Guam. Taiwan’s Defense Ministry spokesperson Sun Li-fang (孫立方) said the scale of the deployment, ranging from Japan's southern islands to the South China Sea, “is the largest compared to the previous four” and poses a significant threat.
In addition to the three major exercises, 2,866 Chinese aircraft entered Taiwan’s ADIZ between January and November 2024, according to data compiled by ChinaPower.
Future defense budget
In response to China’s escalating military intimidation, Taiwan’s Cabinet approved a NT$647 billion defense budget for 2025 in August, equating to 2.45% of GDP. This represents a 7.7% year-on-year increase.
Hsieh Chi-hsien (謝其賢), head of the Ministry of National Defense’s Comptroller Bureau, said at the time that Taiwan's defense budget is “growing steadily” and is expected to eventually reach 3% of GDP. Key spending priorities include Taiwan’s domestic submarine project and expanded drone production. The ministry plans to construct seven submarines between 2025 and 2038 at an estimated cost of NT$284 billion.
With Donald Trump expected to urge America’s regional partners to increase their defense spending, Taiwan will likely continue boosting its defense budget in the coming years.