Taiwanese leader Lai pledges US$40 billion rise in defence spending

Taiwanese leader William Lai Ching-te has set out plans for an unprecedented rise in defence spending worth US$40 billion over the next eight years, describing it as a historic investment to safeguard the island’s democracy and deter an increasingly assertive Beijing.

In an article for The Washington Post published on Wednesday, Lai said his government had committed to “significantly increase” military expenditure to 3.3 per cent of gross domestic product next year, then raise it further to 5 per cent by 2030.

“As part of this effort, my government will introduce a historic US$40 billion [around NT$1.25 trillion] supplementary defence budget, an investment that underscores our commitment to defending Taiwan’s democracy,” he wrote.

Lai said the package would not only support major new arms purchases from the United States but also expand Taiwan’s asymmetric capabilities.

“We aim to bolster deterrence by inserting greater costs and uncertainties into Beijing’s decision-making on the use of force,” he wrote.

Lai did not say how Taiwan would finance the increase in defence spending, but critics have previously warned that spending on social welfare and other services may suffer since Taiwan has been running a deficit, which has to be financed by borrowing.

The proposal drew immediate backing from Washington. Raymond Greene, director of the American Institute in Taiwan – the de facto embassy – said the US welcomed the plan and supported Taiwan’s push to rapidly acquire “critical asymmetric capabilities”.