(Aug 20): Taiwan’s cabinet approved a record NT$1.12 trillion (US$35.1 billion or RM142.43 billion) defence budget for next year, highlighting its push to deter China militarily.

Spending on the armed forces would account for 3.01% of next year’s gross domestic product (GDP), the cabinet said in a statement on Thursday. Taiwan President Lai Ching-te had earlier set a target of spending 3% of GDP on defence.

Part of the money is included in a NT$3.93 trillion central government budget the cabinet also approved. Other funds will come from special budgets. 

Since taking office in spring 2024, Lai has made stepping up military spending and preparation a focus of his policymaking. It comes after President Donald Trump questioned the democracy’s commitment to protecting itself from China, which sees Taiwan as part of its territory that must be brought under its control by force if needed.

Taipei rejects Beijing’s view, and condemns China for stepping up military and coast guard activity around Taiwan in recent years. 

The cabinet also approved a plan to give each person NT$10,000, a move Lai has said would let individuals benefit from the artificial intelligence boom that has sent the economy soaring. An official said the handouts would add 0.35 percentage points to estimated GDP growth next year.

The spending plans must be approved by the opposition-controlled legislature, a process that is likely to be difficult. Taiwan finally passed its central government budget for 2026 last week, ending the longest delay in nearly three decades.

Campaigning for local elections set for Nov 28 could also complicate the process of passing the budget. 

Uploaded by Felyx Teoh