Taiwan’s $40bn Defence Plan Blocked as US Urges Action Against China Threat

Taiwan’s President Lai Ching-te is facing a significant political hurdle as his proposed US$40 billion defence spending plan remains stalled in parliament. Opposition lawmakers are refusing to consider the budget without concessions from the government, a situation that has drawn criticism from Washington.

Political Deadlock Over Defence Funds

President Lai, who assumed office in 2024 after his Democratic Progressive Party (DPP) lost its parliamentary majority, has pledged to increase defence spending to over three percent of Taiwan’s GDP this year. However, the government’s proposal has been blocked ten times since early December due to strong opposition from other parties.

Did You Know? Taiwan’s annual Han Kuang military exercise, a key component of its defence strategy, kicked off on July 9, 2025.

Lai reiterated the need to strengthen national defence on Thursday, urging the opposition to review both the US$40 billion special defence budget and the 2026 general budget. The proposed spending increase comes as Taiwan seeks to deter potential military action from China, which views the island as part of its territory.

Concerns Over US Arms Deliveries

The funds are intended to be allocated over eight years, supporting purchases of new arms from the United States – including US$11 billion in purchases announced in December – and bolstering Taiwan’s capacity for asymmetrical warfare. Taiwan aims to develop a “T-Dome,” a multi-layered air defence system, and acquire long-range precision strike missiles, counter-drone systems, and anti-ballistic missiles.

The opposition parties, the Kuomintang (KMT) and the Taiwan People’s Party (TPP), state they support strengthening Taiwan’s defences but express frustration with delays in US arms deliveries, specifically the 66 F-16V fighter jets. They are demanding greater transparency regarding planned purchases and have requested that President Lai appear before parliament to answer questions, a request he has so far declined.

Expert Insight: The opposition’s focus on US delivery delays highlights the complex interplay between Taiwan’s defence needs, its reliance on external suppliers, and the broader geopolitical context of its relationship with both China and the United States.

Potential Scenarios Moving Forward

The KMT has proposed allocating up to US$28.4 billion of the government’s proposal specifically for US arms procurement. Lai has warned that continued obstruction of his plan and approval of the TPP’s version could undermine Taiwan’s defence capabilities and raise concerns among international allies. Some observers suggest the standoff could persist for months, potentially extending beyond November’s district elections, unless the KMT faces domestic pressure.

Frequently Asked Questions

What is the total amount of the proposed defence spending plan?

The proposed defence spending plan is for US$40 billion.

Which parties are blocking the defence spending plan?

The Kuomintang (KMT) and the Taiwan People’s Party (TPP) are blocking the government’s proposal.

What is China’s position on Taiwan?

China claims Taiwan as part of its territory and has not ruled out using force to annex the island.

As Taiwan navigates these internal political challenges and external pressures, what role will public opinion play in shaping the future of the island’s defence strategy?