Lai says Taiwan will not give up freedom as it sets record NT$1.1 trillion defence budget

A speech on peace and freedom

Taiwan President Lai Ching-te said on Saturday in his National Day speech, delivered outside the Presidential Office in Taipei, that Taiwan cherishes peace but will not give up its freedom. He said peace cannot rely solely on "wishes" and that there must be respect for the right of Taiwan's people to exist. Thousands of people, including foreign diplomats, gathered in front of the Presidential Office for a military parade, dance performances and the speech. Two Chinook helicopters carrying giant Taiwan flags flew over Taipei, defying Beijing's objections, and Taiwanese fighter jets also flew over the capital. Army pilot Lin Chang-cheng said seeing the flags fly was "extremely moving". The celebrations marked the 115th anniversary of the fall of the Qing dynasty and the founding of the Republic of China.

A record defence budget

Lai's government has allocated a record NT$1.1 trillion for defence spending in 2027, equivalent to more than 3% of GDP, or $34.5 billion. Taiwan is ramping up defence spending and modernising its armed forces, but it faces a China with a far larger military that is adding stealth fighter jets, aircraft carriers and a large array of missiles. Successive governments have increased military spending over the past decade as Taiwan seeks to improve its ability to prevent an attack and to show the United States that it takes its own defence seriously. Taiwan's 23 million people live under the threat of a Chinese attack, and Beijing, which claims the island as part of its territory, has not ruled out using force to bring it under its control. Lai framed the spending as a means of preventing conflict.

“Our aim in increasing investment in national defence is not to provoke, but to deter war.”

Lai also said that peace could not be taken for granted and accused China of using military and grey-zone activities to change the status quo across the Taiwan Strait.

Washington, arms sales and Trump

The speech came after US President Donald Trump asked Taiwan to pay for US protection. Officials in Washington and Taipei have repeatedly said US policy on Taiwan remains unchanged under Trump, although some of his remarks have raised concerns in Taipei. Trump raised concerns in May when he suggested that US arms sales to Taiwan could be used as a bargaining chip in negotiations with Xi Jinping after their meeting in Beijing. Taiwan is awaiting Trump's approval of $14 billion in weapons sales, including the Patriot air defense system. At a summit between Trump and Xi in Washington in September, trade and artificial intelligence dominated the agenda, while Taiwan was discussed only behind closed doors. The US State Department described recent Chinese maritime activity off the east coast of Taiwan as profoundly destabilizing and urged Beijing to halt its pressure and open a dialogue with the island's democratically elected authorities.

Regional appeal and the status quo

Lai called on democracies of the Indo-Pacific to unite forces to keep the peace and stability of the status quo in the region. He welcomed talks between the United States and China but said peace requires a correct understanding of history and that Beijing must respect the right of the people of Taiwan to exist. He said Taiwan's stronger self-defence is meant to ensure that dialogue with Beijing takes place on equal footing.

“We are open to exchanges, but we will not accept subordination.”

In September, Xi told Trump that he hoped the United States would take the correct position of opposing Taiwan independence during its visit to Washington. Beijing has pressed Washington to suspend arms sales to Taiwan, and after the May summit in Beijing a record $14 billion arms package for the island was suspended.