President Lai Ching-te used his first New Year address on Wednesday to promise a bigger Taiwan defence budget. He argued that Taiwan stands on a global “line of defense of democracy.” China’s military and political pressure keeps intensifying.
Speaking at the Presidential Office in Taipei, Lai named China, Russia, North Korea and Iran. He said those authoritarian states are collaborating in ways that threaten the rules-based international order. They also threaten the stability of the Indo-Pacific. “Taiwan must be prepared for danger in times of peace,” he said. He added that every citizen shares a duty to protect Taiwan’s democracy and security.
Key Points
- Lai pledged to keep increasing the national defence budget to demonstrate Taiwan’s resolve to defend itself.
- Taiwan’s proposed 2025 defence budget is a record NT$647 billion, roughly 2.45 per cent of GDP.
- The address also warned that opposition-backed bills passed in December threaten democratic institutions at home.
Pressure from Beijing, and Taipei’s response
China claims the self-ruled island as its own territory. It has never renounced using force to bring it under Beijing’s control. In recent years the People’s Liberation Army has sent warships and military aircraft around Taiwan on a near-daily basis. It has staged large exercises encircling the island. It has also peeled away several of Taipei’s remaining diplomatic allies.
Meanwhile, Taipei has answered with a military overhaul. Compulsory service now runs a full year instead of four months, a change beginning in 2024. The military is building up stocks of mobile anti-ship and air-defence missiles. Taipei is also buying heavily from the United States, its main unofficial ally and arms supplier. In October 2024, Washington approved a package worth nearly $2 billion. For the first time, it included the NASAMS air-defence system, battle-tested in Ukraine, along with advanced radar.
Background: a Taiwan defence budget rising with the threat
Taiwan’s cabinet proposed a record Taiwan defence budget for 2025: NT$647 billion (about US$19.7 billion). That is an increase of about 7.7 per cent over the previous year. It continues a steady climb in spending under both Lai and his predecessor, Tsai Ing-wen. The money funds everything from indigenous submarine construction to asymmetric weapons. Taiwanese and American strategists believe those weapons would matter most in deterring an invasion or blockade. They favour truck-mounted missiles, drones, mines and portable air defences over prestige platforms alone.
Lai used the address to argue that defence is not only a military question. He urged cooperation with democratic partners on resilient supply chains — in drones, low-orbit communications satellites, robotics and surveillance technology. That cooperation ties Taiwan’s security to its place at the centre of the global semiconductor industry.
What happens next
The defence pledge lands in a divided legislature. In December, the opposition Kuomintang and its allies pushed through three contested bills. The bills tighten recall rules, shift budget allocations away from the central government, and change how the Constitutional Court operates. The sessions saw physical scuffles among lawmakers. Lai and his Democratic Progressive Party say the measures endanger democracy. The budget bills he champions must still survive that same legislature.
Abroad, the next test arrives quickly. Washington changes administration on Jan. 20. Taiwan is watching for signals on arms-sale approvals and the pace of deliveries. A backlog worth many billions already exists. For Taipei, Lai aimed his New Year message at two audiences at once. Taiwan is spending on its own defence, and it expects its partners to keep faith with it.
Lai’s domestic position shapes how far the pledge travels. His Democratic Progressive Party holds the presidency but not the legislature. The Kuomintang and the Taiwan People’s Party together command a majority there. That is the same alignment that passed the December bills he criticised. It must also approve the special budgets that fund much major procurement. Defence analysts in Taipei note that a rising regular budget can coexist with stalled special appropriations. That leaves a gap between announced spending and delivered capability. The New Year address was, in part, an attempt to close that gap in public. It was a signal to Washington that the Taiwan defence budget does not depend on which party holds which branch of government.
Sources: Office of the President, Republic of China (Taiwan), New Year address, Jan. 1, 2025; Taiwan cabinet 2025 budget proposal; U.S. State Department arms-sale notifications.
