Parsing Taiwanese Public Opinion and Political Debates over the Defense Budget

Global Taiwan Brief - Volume 9, Issue 15 (August 7, 2024)

(Author's note: The central government of Taiwan announced on August 6 that the Lai Administration's proposed total defense budget for 2025, including the special budget and other funds, is NT$647 billion [US$19.74 billion], which represents a 6 percent YOY increase and still below the minimum 3 percent of GDP as called for by many US policymakers and defense analysts.)

Amid growing tensions across the Taiwan Strait and increased bipartisan calls from the United States for the island-nation to raise its defense budget, Taiwan has been steadily increasing its defense spending. Since 2016, after the Democratic Progressive Party (DPP, 民進黨) regained control of the presidency, Taiwan’s baseline defense budget has steadily grown from USD $9.6 billion in 2016 to USD $16.6 billion in 2023. [1] These increases in defense spending have taken place in the face of intensified coercive pressure from the People’s Republic of China (PRC). Following the DPP’s unprecedented third consecutive presidential election win, Beijing has described the new DPP president, Lai Ching-te (賴清德), as a “Taiwan separatist” and has ratcheted up its military and non-military pressure campaigns against the island-democracy since the election.?

As the new administration in Taiwan prepares to announce its 2025 budget, reports indicate that increases in defense spending are likely to continue. According to one report, the new Lai Administration is preparing to propose a baseline national defense budget for 2025 of around USD $15.02 billion (NTD $490 billion), and including the special budget and other funds would raise it to USD $19.32 billion (NTD $630 billion)—which would represent around a 5 percent increase from the 2024 budget. The planned announcement of next year’s defense budget follows the steady drumbeat of calls by former senior US government officials and defense experts for Taiwan to increase its defense spending. However, this decision and former President Donald Trump’s statement that “Taiwan should pay us for defense” have also reignited heated debates within Taiwan’s political space about the appropriate level of defense spending for the besieged island democracy.?

Defense Spending Benchmarks: Three Percent of GDP, Per Capita, or Share of Government Spending

Despite the consistent year-over-year (YOY) increases in Taiwan’s defense spending over the past eight years, the speculated amount for 2025 would still fall short of the 3 percent of gross domestic product (GDP) that many policymakers and defense analysts in the United States have called on Taiwan to spend on its self-defense. To put these increases into perspective, in 2016, Taiwan’s baseline defense spending amounted to 1.82 percent of GDP and, in 2023, 2.17 percent. After another YOY increase in 2024, the net amount still accounted only for around 2.5 percent of GDP—leading Elbridge Colby, a former senior Trump Administration Pentagon official, to describe the investment as “wildly inadequate.” Recently, the 27th US National Security Advisor Amb. (ret.) Robert O’Brien also noted that given the threats that Taiwan faces from the PRC, Taipei ought to be spending around 5 percent of its GDP on defense.

In light of the heightened scrutiny over Taiwan’s defense spending, it is indeed worth examining whether Taiwan is spending enough on its defense. How does Taiwan’s defense spending stack up to other countries of similar economic capacity, or countries that face comparable—if not less urgent—threats? The data from the following charts are drawn from the Stockholm International Peace Research Institute’s (SIPRI) Military Expenditure Database, and show Taiwan’s defense in actual terms: as percentage of GDP, per capita, and as share of total government spending in comparison to 8 other countries.

While a preliminary comparison of Taiwan’s defense outlays shows that the percentage of GDP that Taiwan spends is relatively lower than other countries facing a similar level of threat, there are only nearly two dozen countries in the world that currently spend more than 3 percent of GDP on defense. [2] It is also important to note that defense spending measured in terms of a percentage of GDP is not the only metric for understanding the real value of overall defense spending—it can also be measured as a percentage of overall government spending (which would demonstrate its priority in government expenditures), on per capita terms (which would reflect government investment in each citizen individual based on the population size), and, of course, in actual terms.?

Overall, while Taiwan ranks on the lower side in terms of its defense spending as a percentage of its GDP and per capita, it ranks high for defense spending in terms of overall government spending. Still, in terms of actual spending, it is clear that Taiwan is not spending as much as it could—and arguably should—in light of the threats it is facing.

Domestic Political Dynamics Affecting Debate over Defense Budget

Multiple factors contribute to Taiwan’s restrained defense spending—not least of which are the political dynamics of a relatively young democracy that is not yet 20 years old.?

The DPP’s stance on raising defense spending is quite clear given the track record of the previous eight years, especially since the current president also doubles as the chairman of the DPP. Less clear, however, are the views of the opposition parties: the Kuomintang (KMT, 國民黨) and Taiwan’s People Party (TPP, 民眾黨), which together now control a majority in the Legislative Yuan after the January elections.? Moreover, the defense budget would need to be passed through the 13 members of the Legislative Yuan’s Foreign Affairs and Defense Committee (外交及國防委員會), which is currently comprised of six members each from the KMT and DPP, and one member from the TPP.?

While mainstream KMT and TPP officials have expressed support for increased defense spending, the influence of the pro-China wing within the KMT—represented by the likes of Chang Ya-chung (張亞中), who was the runner-up in the party’s chairmanship election in 2020 and is closely aligned with former firebrand KMT Chairwoman Hung Hsiu-chu (洪秀柱)—coupled with the party’s current efforts to engage China, raises some doubt as to whether that is politically feasible.?

With a decisive eight seats in the Legislative Yuan, the TPP could cast the consequential swing votes in any critical decision considered by the lawmaking body. With next year’s national defense budget expected to hit a new high, TPP legislator Lin Yi-chun (林憶君), the one and only TPP member in the Legislative Yuan’s Foreign Affairs and Defense Committee and therefore the tie-breaker on any votes filtered along party lines, opined that it is normal for the national defense budget to increase year by year as the economy grows. According to Lin, rather than whether or not the spending should increase, the key issue would be how to spend money wisely. Lin divided Taiwan’s defense spending into three clusters: personnel, training, and military investments—and pointed out that there would be pressures for trade-offs between the three in a resource-constrained environment. In order to deal with growing threats from the Chinese Communist Party (CCP, 中國共產黨), Lin said that Taiwan should increase its defense budget to 3 percent of its overall GDP, and increase domestic procurement to help upgrade Taiwan’s defense industrial capacity.

Image: Results of a public opinion survey conducted in 2023 by Timothy S. Rich and Miriam Dawson that asked Taiwanese respondents if the government spends too much, too little, or about the right amount on defense. (Image source: Taiwan Insight)

Some Taiwan defense analysts, however, are skeptical of the feasibility of increasing the country’s defense spending. Chieh Chung (揭仲), a seasoned defense analyst who is currently an associate research fellow with the KMT’s official think tank the National Policy Foundation (國家政策研究基金會), poured cold water on the idea that Taiwan can raise its defense spending to 5 percent of the nation’s GDP. According to Chieh, if Taiwan were to raise its defense spending to 5 percent of GDP, that would account for 43 percent of the government’s total spending for 2024 (or USD $37.66 billion/NTD $1.22 trillion), which would be an unrealistic expectation for any democracy during peacetime. He was also skeptical that 3 percent of GDP would be feasible, as it would amount to 26 percent of all government spending in 2024. According to Chieh, raising defense spending to 3 percent of GDP may have been more realistic back in 2008 when it would have accounted for 21 percent of all government spending.?

Another aspect of the conversation that has been relatively undiscussed is that there are also legal constraints on increasing Taiwan’s defense spending. As an exercise of tight fiscal discipline, Taiwan’s Public Debt Act (公共債務法) restricts the central government’s total public debt to no more than 40.6 percent of the average gross domestic product for the previous three years. In the early 2000s, Taiwan government nearly crossed this legal red line and it could potentially approach this threshold if it needed to significantly borrow large sums of money to surge military spending.

Shifting Public Opinion on Defense and Defense Spending

In any democracy, budget allocations reflect the government’s priorities but they also require public support. As such, budgetary considerations are always a matter of impassioned political contest, and social spending for public services that are readily visible is preferred over seemingly intangible military spending that ordinary citizens cannot readily see or feel until needed in a time of crisis. This has traditionally been the case in Taiwan, which also had to contend with sensitive civil-military relations during the martial law period—with the military historically viewed as a tool of government repression.?

However, public attitudes toward the military and defense spending appear to be changing. According to a December 2023 survey conducted by the Institute for National Defense and Security Research (INDSR, 國防安全研究院), a think tank supported by the Ministry of National Defense (MND, 國防部), 55 percent of respondents think the current defense budget is insufficient, whereas 45 percent think that it is sufficient; 59 percent support reducing other government expenses to raise the defense budget to 3 percent of GDP, whereas 42 percent oppose; only 41 percent of respondents support raising taxes to raise the defense budget to 3 percent of GDP, whereas 59 percent oppose. By comparison, surveys conducted in 2020 showed that only between 39.1 and 42.1 percent of respondents supported increased defense spending, as manifested in the purchase of arms.?

In another INDSR survey conducted in March, 40 percent of the respondents thought that the defense budget was sufficient and 59 percent supported raising the defense budget to 3 percent of GDP. On other defense-related matters, 83 percent support the decision to extend conscription (to one year), 53.9 percent have confidence in the military, and 64.6 percent of respondents have a positive image of the military.?

Conclusion

What do these data points suggest about Taiwan’s defense spending and the Taiwanese public view? To be sure, Taiwan’s defense spending is relatively low for a country of its economic capacity when compared to other nations facing a similar threat environment. Yet, given the relatively high percentage of defense spending as a matter of overall government expenditure, it would be unfair to characterize these efforts as unserious. Moreover, when one evaluates total defense-related expenditures, it should also consider what it does or does not include. If enhancing critical infrastructure resiliency—as suggested by a recent Atlantic Council report—and vital to national security is considered as broader defense spending, this would significantly raise Taiwan’s defense budget.?

In terms of the shift in how the Taiwanese public views defense spending—which has been catalyzed by Russia’s invasion of Ukraine—the population may be reaching a tipping point in how they view the necessity of more investments in the military and national defense. One indicator can be found in the groundswell of public awareness and concerns about the Ukraine war leading to a burgeoning of civil defense groups in Taiwan. President Lai has the opportunity to build on the successes of the Tsai Administration to continue improving the public’s image of the military, and to strengthen public support for overall national defense and resiliency.

While the speculated baseline budget for 2025 reflects only a modest increase in Taiwan’s defense spending, it is also important to remember that the baseline numbers alone do not illustrate the whole picture and are contingent on a host of other factors. As previously noted by GTI Deputy Director John Dotson: “It seems clear that special budget supplementals will continue to be a significant part of overall Taiwan defense spending, particularly as it pertains to the acquisition of new hardware.”?

Overall, Taiwan has the economic capacity to raise defense spending—but there are constraints, and there will be trade-offs. Taiwanese leaders must find the means to raise the country’s self-defense capacity, but this is also contingent on addressing legal constraints, and both the capacity and? willingness of foreign powers to provide it with the training and arms that it needs to address the spectrum of threats facing it.

With real constraints on the United States’ industrial capacity to provide Taiwan with the defense-related goods and services it requires, the United States—along with allies and like-minded partners—has to consider innovative concepts and mechanisms to deliver on Taiwan’s defense needs. For instance, a distributed defense industrial base and co-production with Taiwan could be one consideration. For Taipei’s part, although past administrations may have been hesitant to show how much the Taiwanese government was actually spending on defense-related items due to concerns about a backlash from the public concerning unnecessary expenses, public attitudes in Taiwan appear to be shifting.? Taiwan’s leaders have the opportunity to seize on this shift to make long overdue reforms—and time is of the essence.

[1] This figure is drawn from the SIPRI Military Expenditure Database (https://www.sipri.org/databases/milex) and does not include the special budget or funds.?

[2] According to SIPRI, in 2023, the following countries for which it had data for spent more than 3 percent of GDP on defense: Algeria, Morocco, Burkina Faso, Burundi, Mali, South Sudan, Togo, United States, Kyrgyz Republic, Poland, Armenia, Azerbaijan, Russia, Ukraine, Greece, Bahrain, Israel, Jordan, Kuwait, Lebanon, Oman, Saudi Arabia.