China’s Military Budget and Taiwan
Dr. Vijay Sakhuja
China’s annual military spending announcement is perhaps the most awaited in the Asian context and features prominently in the strategic debates and media, particularly among its neighbours i.e. India, Japan, Korea, Taiwan, Philippines, Vietnam, to name a few.
For 2025, China has allocated US$ 249 billion for national defense which corresponds to a 7.2 percent increase. According to the Global Times, the official media mouthpiece, the single digit increase in the defence budget has remained steady for the last 10 years, and for the last two years (2023 and 2024) it has remained fixed at 7.2 percent. Further, according to Lou Qinjian, the official spokesperson for the third session of the 14th National People’s Congress, China’s defense spending as a percentage of GDP has remained under 1.5 percent for many years, lower than the global average. Further, it has been noted that it is a “moderate rise over the past decade amid China's steady economic development and GDP growth”.
A Chinese military expert has explained the necessity for such a large defence budget, among other issues, the “complex security environment” in the South China Sea emerging from provocations by the Philippines over Chinese islands and reefs. Also, deployment of the Typhon missile system by the US in the Philippines has added a new dimension to regional security. Above all, Taiwanese secessionists in collusion with external forces are seeking “Taiwan independence”. Besides, the US is arming Taiwan.
Taiwan announced its 2025 defence budget and the Cabinet has allocated NT$ 647 billion for defense spending which corresponds to 2.45 percent of the GDP, “some of which was later cut or frozen by the opposition-controlled Legislature”. Interestingly, Taiwanese government is under pressure from the US, particularly President Trump who insists that the defence budget be increased to 10 percent of GDP. Although the Taiwanese President has proposed a special budget to raise defense spending to over 3 percent of GDP, the country is not in a position and the “budget would be determined based on the country's financial capacity and military needs”.
The US is visibly disappointed with President Lai Ching-te decisions, given that Elbridge Colby, Under Secretary of Defense for Policy at his Senate confirmation hearing had stated that Taiwan should spend more on defense “10%, or at least something in that ballpark”.
Colby has also observed that “Losing Taiwan, Taiwan's fall, would be a disaster for American interests” clearly flagging the strategic importance of Taiwan to the US particularly when balance of military power is in China's favor necessitating a reversal. “It would be essentially my number one, or one of my very top priorities, if confirmed, to try to get us prepared as quickly as possible, and then over the medium and longer term as well,”
At the political level, the war of words between Beijing and Taipei continues. China has accused President Lai Ching-te of continuously promoting “separatism”, and Taiwan, in response, has labelled China a “troublemaker”. Also, President Lai has “vowed to tackle Beijing's efforts to “absorb” Taiwan through infiltration campaigns”. As far as military posturing is concerned, China continues to conduct air and naval patrolling around the island, a pattern similar to the 2024 military posturing. According to the Taiwanese military, “such patrols near the island” are observed “every 7-10 days on average”.
Meanwhile, there are reports that President Xi Jinping could visit the US in “not too distant future”. Earlier there were media reports that President Donald Trump could visit China as early as next month. Although the dates of the respective Presidential visits to each other’s countries is not confirmed, it is fair to assume that Taiwan will find reference in their discussions, particularly from the Chinese side. China can be expected to raise the issue of US military sales. This is notwithstanding the fact that Taiwan is yet to receive approximately $21.95 billion worth of U.S. arms that are pending for over four years of which 72 percent (about $15.7 billion) were initiated during Trump’s first term. It merits mention that under President Biden’s term, Taiwan did receive military support from “existing U.S. inventories during emergencies”.
Taiwan is currently confronting a difficult situation. The US is pressurizing its allies and partners to allocate more funds for defence and to buy weapons. Also, the Pentagon is reviewing arms export protocols. Taiwan is not an exception. It has to either pursue self-reliance through indigenous production or explore alternate sources. Significantly, this predicament is not peculiar to Taiwan; even Japan, South Korea, Singapore and India are confronted with similar challenges. Under the circumstances, it remains to be seen if a new military hardware production powerhouses led by domestic defense industries emerges in Asia that will help broadening international partnerships outside of the US.
Dr. Vijay Sakhuja is Professor and Head, Center of Excellence for Geopolitics and International Studies (CEGIS), REVA University, Bengaluru and is associated with Kalinga International Foundation, New Delhi.
