Taiwan announced on Thursday a record increase in defence spending for 2026, raising its military budget by nearly a quarter to over 3% of GDP for the first time in 17 years. The move comes as China intensifies military pressure and as Washington presses Taipei to demonstrate its own commitment to deterrence. Officials said the funds will support new aircraft, naval upgrades, and expanded roles for the coast guard in countering Beijing’s “grey-zone” tactics.

A landmark budget shift

Premier Cho Jung-tai confirmed the 2026 defence allocation at T$949.5 billion, underscoring Taiwan’s determination to “safeguard national sovereignty and security” while contributing to Indo-Pacific stability. The increase follows President Lai Ching-te’s pledge to push spending above the 3% GDP threshold, aligning more closely with U.S. expectations.

Historical and Recent Defense Budget Trends

According to official data (in New Taiwan Dollars and USD), Taiwan’s base defense budget across recent years:

• 2019: NT$346B (~US$11B)
• 2020: NT$411B (~US$13.1B or 2.3% of GDP)
• 2021: NT$453B (~US$16.2B or ~2.36% of GDP)
• 2022: NT$595.2B (~US$18.6B or 2.2% of GDP)
• 2023: NT$531.2 B (~US$16.6B; GDP share not specified)
• 2024: NT$611.2 B (~US$19.1B or approximately 2.5% of GDP)

Additional context from broader datasets confirms these figures:

• 2024 saw Taiwan spending about 2.5% of GDP on defense—up from around 2% in 2017, rising to 2.5% by 2023. Annual defense expenditure in 2024 reached around NT$600 billion.

Coast guard takes a frontline role

For the first time, the coast guard is included in the budget, reflecting its growing importance as Taiwan faces near-daily encounters with Chinese patrols. “They are standing on the frontline,” a senior official told Reuters, noting the coast guard would be pressed into naval duties in the event of war.

Taipei plans to allocate over T$117.6 billion in special funds for modernisation, including new fighter jets and bolstered naval capabilities. This builds on ongoing programs, such as Taiwan’s domestically built submarine project, aimed at countering China’s rapid military advances.

China’s military challenge

China, which claims Taiwan as its own territory, has stepped up air incursions and naval drills, the latest in April. Beijing’s defence budget rise of 7.2% this year to 1.78 trillion yuan reflects its pursuit of advanced carriers, stealth jets, and missile systems.