Taiwan is developing its indigenous defense industries, President Lai Ching-te (賴清德) said on October 10.
“Our aim by increasing investment in national defense is not to provoke; rather, it is to deter war,” Lai said at the ceremony to mark the annual Double Ten national day celebrations. October 10 is the National Day of the Republic of China, Taiwan’s official name.
Taiwan’s government has announced it will spend a total 1.268 trillion New Taiwan dollars, or approximately $39.7 billion, on defense next year. That’s equivalent to 3.4% of projected GDP.
Much of that would be spent in Taiwan, on ammunition, drones and air defense. The domestic anti-ship missile production lines are also going to be kept rolling.
Taiwan has been under pressure from the U.S. to raise defense spending. The Trump administration wants allies and partners, including Taiwan, to increase their defense spending to 5% of GDP.
Trump approved a huge $11.1 billion arms sale to Taiwan at the end of 2025, including anti-tank missiles, artillery, and drones. But a second even larger package has been held up this year, with the president reportedly keeping it on ice to please China.
The 2027 budget needs to be approved by the legislature, which is controlled by the opposition Chinese Nationalist Party, or KMT, and the smaller Taiwan People’s Party, or TPP. It took the legislature eight months to approve the 2026 budget.
Funding for the arms sales from the U.S. was subject to sustained political wrangling this year, with the total amount requested by the Lai administration not passed.
The government has also struggled to acquire effective systems, especially in the drone space. Domino Theory’s investigation showed that procurement lacked effective oversight.
Some of Taiwan’s military was on display at the ceremony on Saturday. A Chinook heavy lift helicopter trailed an enormous Republic of China flag over the presidential building and across downtown Taipei, flanked by two smaller Black Hawk helicopters.
Later, four different fast jet types conducted a fly-over, including American-made F-16s. Taiwan has already upgraded its existing fleet of F-16s to the most modern standard, and has 66 more on order. The first two of these arrived on October 2.
China condemned Lai’s national day speech, saying that he was a “disaster to Taiwan” and a “calamity for peace.”
“Lai Ching-te stubbornly adheres to the ‘Taiwan independence’ stance, distorts the truth, exaggerates the so-called ‘mainland military threat,’ incites cross-strait confrontation, and attempts to ‘seek independence through force’ and ‘seek independence by relying on foreign powers,’” Chen Xi (陳曦), a Chinese military spokesperson, said.
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