Taiwan’s Executive Yuan recently approved its proposed 2027 central government budget, with overall defense spending reaching a record NT$1.1225 trillion (US$35.3 billion), equivalent to just over 3 percent of projected GDP.
A U.S. State Department spokesperson welcomed the proposal on Aug. 21, saying that “the threat Taiwan faces from China has grown considerably” and that Washington supports Taiwan in acquiring critical defense capabilities commensurate with the threats it faces.
Taiwan’s defense budget surpasses NT$1 trillion for the first time
On Aug. 20, Taiwan’s Executive Yuan approved the 2027 central government budget proposal, which is expected to be submitted to the Legislative Yuan for review by the end of August.
According to CNA/Focus Taiwan, Taiwan’s Ministry of National Defense has budgeted NT$691.9 billion for 2027. Adding NT$218.2 billion in special budgets, NT$60.7 billion in nonprofit special funds, NT$103.8 billion for military pensions, and NT$47.9 billion for the Coast Guard Administration brings overall defense spending to NT$1.1225 trillion. Taiwan’s Directorate-General of Budget, Accounting and Statistics said the calculation mirrors the methodology used by NATO.
The figure marks the first time Taiwan’s overall defense budget has surpassed NT$1 trillion.
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Using the 2026 GDP projection of NT$28.6 trillion that was available when the previous budget was prepared, the NT$1.1225 trillion figure would amount to 3.93 percent of GDP. However, using the projected 2027 GDP of NT$37.3 trillion released in August 2026, defense spending amounts to 3.01 percent of GDP.
President Lai Ching-te has set a goal of keeping Taiwan’s defense spending above 3 percent of GDP while gradually increasing it to 5 percent by 2030.
US State Department welcomes Taiwan defense budget above 3% of GDP
A U.S. State Department spokesperson, speaking on background, told CNA on Aug. 21 that Washington welcomed Taiwan’s proposed increase in defense spending to more than 3 percent of GDP, saying the proposal demonstrated Taiwan’s determination to strengthen its self-defense capabilities.
The spokesperson said the United States supports Taiwan’s acquisition of critical defense capabilities “consistent with the Taiwan Relations Act and more than 45 years of commitment across multiple U.S. administrations.”
The spokesperson added: “The threat Taiwan faces from China has grown considerably.”
The Taiwan Relations Act states that the United States will make available to Taiwan defense articles and services in quantities necessary to enable Taiwan to maintain a sufficient self-defense capability. The law also states that the president and Congress are to determine the nature and quantity of those defense articles and services based on Taiwan’s defense needs.
US scholar: Lai government sending the right signal
CNA asked Michael Hunzeker, an associate professor at George Mason University who studies Taiwan defense issues, for his assessment of the proposed budget.
Hunzeker described the proposal as a “very positive development,” saying it demonstrates that Lai remains committed to maintaining defense spending above 3 percent of GDP while moving toward his goal of reaching 5 percent by 2030.
Because the White House has been urging allies and partners to increase defense spending, Hunzeker said the proposal should send a signal that resonates with Washington.
“It should likewise send a clear signal to Beijing that its increasingly aggressive actions have not caused the Lai administration to back down on its national security promises,” he said.
Hunzeker said continued increases in defense spending should provide Taiwan’s Ministry of National Defense and armed forces with additional resources to acquire better and more appropriate weapons, ammunition, and spare parts; expand rigorous and realistic military training; strengthen resilience efforts; and attract and retain personnel for critical frontline combat units.
However, Hunzeker cautioned that the proposal is only the beginning of a lengthy process and that significant obstacles remain.
The budget still requires approval from the Legislative Yuan. Hunzeker noted that lawmakers only recently passed the 2026 budget and pointed to opposition parties’ resistance to Lai’s proposed eight-year special defense budget. He said the 2027 proposal could face similarly close scrutiny as Taiwan’s political parties prepare for upcoming elections.
Wall Street Journal: Sending signals to Washington and Beijing
Meanwhile, The Wall Street Journal reported that Taiwan’s proposed record defense budget is intended to send messages to both Washington and Beijing as Taipei faces growing military pressure from China.
President Donald Trump has pushed Taiwan and other U.S. partners in the region that rely on American military power for deterrence to devote more resources to their own defense.
Taiwan’s proposed budget sends a signal to Washington that Taipei is investing more heavily in its own security and is prepared to purchase additional weapons from the United States, according to the Journal.
At the same time, the increased spending sends a message to Beijing that Taiwan intends to strengthen its defenses and raise the potential cost of any attempt to seize the island by force.
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