President Lai Ching-te said Taiwan can comfortably afford a proposed $40 billion special defence budget, citing the island’s strong economic growth and the need to share global security responsibilities with allies such as the United States.
Speaking on Saturday at an event marking the 30th anniversary of Taiwan’s first direct presidential election, Lai said the government remains determined to defend the island and protect its democratic system. The anniversary recalls the tense period in 1996 when China fired missiles into waters near Taiwan in an attempt to influence the vote.
Lai’s proposed eight-year defence spending plan aims to strengthen Taiwan’s military capabilities in response to what the government sees as growing pressure from China. However, the proposal has faced delays in parliament, where opposition lawmakers—who hold a majority—argue that the details of the spending plan remain unclear and say they cannot approve what they call “blank cheques.”
The president said Taiwan’s strong economy makes the spending feasible. The island, a global technology powerhouse and leading producer of advanced semiconductors, has experienced rapid growth driven by soaring demand for artificial intelligence technologies. Taiwan’s economy expanded at its fastest pace in 15 years in 2025.
Lai also highlighted plans to integrate artificial intelligence into national defence, including building a real-time defence system and expanding Taiwan’s domestic defence industry. According to him, the proposed defence spending would not only strengthen national security but also support economic and industrial development.
Meanwhile, Taiwan’s parliament on Friday authorised the government to proceed with around $9 billion in arms deals with the United States to ensure contract deadlines are not missed, even though the broader defence budget has not yet been approved.
China considers Taiwan part of its territory and has never ruled out the use of force to bring the island under its control. President Lai has rejected Beijing’s sovereignty claims, insisting that only the people of Taiwan can decide their future.
Beijing has increased military pressure on Taiwan in recent years. Its warships and warplanes frequently operate near the island, and China held large-scale military exercises around Taiwan as recently as December.