Taiwan proposes a 16% defense budget increase to over NT$1 trillion for 2027

Taiwan's cabinet is set to propose a record 16% increase in its 2027 defense budget, pushing spending past NT$1.1 trillion ($31 billion) for the first time. The proposal comes amid escalating military pressure from China, which continues daily operations around the island, and persistent calls from Washington for Taipei to boost its self-defense capabilities. The budget, which includes a NT$240 billion special allocation for fighter jets and uncrewed vehicles, is projected to exceed 3% of Taiwan's GDP.

Taiwan 2027 defense budget increase

• ▪The proposed 2027 Taiwan defense budget, scheduled for unveiling on August 20, 2026, includes funding for the coast guard, veterans, and special projects.
• ▪Taiwan's cabinet plans to propose a 16% increase in defense spending for 2027, bringing the total budget to over NT$1.1 trillion ($31 billion) for the first time.
• ▪Under the regular government budget, Taiwan's Ministry of National Defense would receive over NT$700 billion, the Coast Guard Administration over NT$27 billion, and the Veterans Affairs Council over NT$100 billion.

US pressure on defense spending

• ▪Taiwan President Lai Ching-te has enthusiastically embraced calls from the United States to increase Taiwan's self-defense spending.
• ▪Taiwan faces calls from Washington to spend more on its own defense, mirroring United States pressure on European nations to increase military spending.

China military threat to Taiwan

• ▪The Chinese military operates almost daily around Taiwan and held periodic war games, with the last major exercises occurring in late December.
• ▪In March 2026, China unveiled a 7% rise in its annual defense spending, bringing its military budget to 1.91 trillion yuan ($283.08 billion).
• ▪China has ramped up military and political pressure over the past few years to assert its territorial claims over democratically governed Taiwan.

Special defense procurement programs

• ▪Taiwan's special defense budget is expected to reach NT$240 billion, covering procurement programs for new fighter jets, enhanced naval and air capabilities, and uncrewed vehicles.
• ▪The Executive Yuan has proposed a draft special act on the procurement of domestically developed uncrewed vehicles, which requires approval from the Legislative Yuan.

Taiwan GDP growth projections

• ▪Taiwan's defense spending is projected to exceed 3% of its gross domestic product, calculated in line with NATO standards.
• ▪If Taiwan's gross domestic product grows by 10% to NT$36.8 trillion, the sharp increase in defense spending would push it above 3% of GDP.