Taiwan’s government formally proposed raising defence spending by 18% in 2027 to T$1.1225 trillion, exceeding 3% of gross domestic product and taking the budget above T$1 trillion for the first time. The increase comes as China intensifies military and political pressure on Taiwan, which Beijing claims as its territory, and as Washington urges Taipei to spend more on its own defence. President Lai Ching-te has supported the higher spending, but the proposal faces scrutiny from Taiwan’s opposition-dominated parliament. The budget also allocates funds to veterans and the Coast Guard, which supports the navy in protecting Taiwan’s maritime areas. Taiwan is pursuing military modernisation, including the development of domestically built submarines, while China conducts almost daily operations around the island and has expanded coastguard patrol tactics. Taiwan’s annual Han Kuang military drills recently simulated scenarios including breaking a potential Chinese maritime blockade; China’s Defence Ministry called the exercises a wasteful charade that stoked war panic.