Taiwan Allocates NT$1.25 Trillion for Defense Amid CCP Threats

The Executive Yuan of Taiwan has unveiled a significant defense budget bill amounting to NT$1.25 trillion (approximately US$39.89 billion). This initiative, announced by President William Lai on March 15, 2024, explicitly identifies the military threats posed by the Chinese Communist Party (CCP) for the first time.

Budget Focused on Enhancing Defense Capabilities

According to the proposed legislation, the funding aims to counter the ongoing expansion of the CCP’s military power. The plan includes acquiring advanced weaponry and equipment designed to bolster the armed forces’ defensive resilience and asymmetric capabilities. Key projects highlighted in the budget include the development of a “Taiwan dome” air-defense system, which will leverage high-level detection and interception technologies, including artificial intelligence to enhance operational efficiency.

The Ministry of National Defense has stated that the budget will also support the establishment of a “non-red” supply chain to promote investment in Taiwan’s national defense industry. Premier Cho Jung-tai has called on opposition parties to support the initiative, emphasizing the necessity for improved self-defense mechanisms in light of escalated military coercion from Beijing. “The government has a responsibility to demonstrate its resolve in safeguarding Taiwan’s sovereignty,” Cho remarked.

Legislative Review and Opposition Concerns

The proposed budget will now move to the opposition-controlled Legislative Yuan for review. Opposition parties, including the Chinese Nationalist Party (KMT) and the Taiwan People’s Party, have expressed concerns regarding the budget’s reliance on debt financing, warning it could lead to cuts in social welfare, education, and other critical programs. They have pledged to scrutinize the plan to ensure that taxpayer funds are utilized responsibly.

The bill outlines seven major categories for procurement, which include precision artillery, long-range precision-strike missiles, uncrewed vehicles, anti-drone systems, and advanced air-defense systems. Additionally, it emphasizes the development of equipment to enhance sustained combat endurance and systems jointly developed or procured with the United States.

Funding for this ambitious defense initiative will come from special budgets and will be exempt from the restrictions of Article 23 of the Budget Act, which typically limits the use of capital for recurrent expenditures. The government plans to source funds either from prior-year budget surpluses or through borrowing, with annual borrowing limits exempted from restrictions under Article 5-7 of the Public Debt Act.

The special ordinance and budget provisions are set to take effect upon promulgation and will remain valid until December 31, 2033.

Collaboration with the United States

Separately, Minister of National Defense Wellington Koo indicated that Taiwan has already engaged in preliminary discussions with the United States regarding potential arms purchases as part of this budget. He noted that acquisitions from the US will constitute a significant portion of the spending plans. Taiwan has received formal procurement item quantities, pricing details, and transaction timelines from the U.S. Department of Defense, confirming the US’s willingness to assist with weapon supplies. However, Koo stated that further details cannot be disclosed until there is a formal notification to the US Congress.

Beyond defense capabilities, Koo highlighted that this budget is expected to generate approximately 90,000 jobs and deliver a direct economic benefit of around NT$400 billion to Taiwan’s economy.

Overall, this substantial defense investment underscores Taiwan’s commitment to enhancing its military capabilities in response to perceived threats from the CCP, while also aiming to stimulate economic growth.