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Taiwan’s top officials have approved a record defense budget of $20.2 billion for 2025, a 7.7% increase from the previous year.

What’s the deal: The 7.7% increase in Taiwan’s defense budget for 2025 is primarily allocated to enhance personnel expenses, equipment maintenance, and procurement. The budget includes NT$5.6 billion for personnel expenses, $4.66 billion for maintaining existing equipment, and a significant 16% increase in procurement spending, amounting to $4.59 billion, primarily earmarked for purchasing American military equipment. Additionally, $2.83 billion is allocated as part of a special five-year budget, initiated in 2021, for major acquisitions such as F-16V fighters and advanced missile systems.

Why the increase: Taiwanese officials say the increase in defense spending is driven by the escalating military threats from China, which has significantly intensified its activities around the island, viewing it as a renegade province. With a record 1,739 incidents of Chinese People’s Liberation Army intrusions into Taiwan’s air defense identification zone in 2024, the heightened threat of a potential invasion has necessitated a stronger defense posture.

What Taiwanese officials are saying: Hsieh Chi-hsien, head of the Ministry of National Defense’s Comptroller Bureau, said, “We must still compile the defense budget based on weapons needed to shore up our defenses. We also need to take into account the nation’s financial situation.”