Taiwan President William Lai Ching-te said in his National Day address Saturday that the island's record defense spending is meant to prevent a war, not start one. China's Taiwan Affairs Office rejected the speech within hours.
"Taiwan cherishes peace, but we will not give up our freedom," Lai told a crowd outside the Presidential Office in Taipei on Oct. 10, Reuters reported. Boosting defenses, he said, "is not to provoke; rather, it is to deter war," Al Jazeera reported.
A record defense budget
Lai's government has set aside a record NT$1.1 trillion, about $34.5 billion, for defense in 2027, more than 3% of gross domestic product, Al Jazeera reported. Ecker Geopolitics could not independently confirm the budget figure in a second source.
Lai said China is applying "pressure through military and grey-zone activities in an attempt to alter the status quo across the Taiwan Strait," according to Al Jazeera. "Peace cannot rely solely on wishes," he said.
He welcomed talks between Washington and Beijing but said "there must be respect for the right of the people of Taiwan to exist," Reuters reported. He urged democracies in the Indo-Pacific to join forces to maintain peace and stability.
Reuters noted that Lai did not repeat his usual line that neither side of the strait is "subordinate" to the other. He said Taiwan must become a "city upon a hill."
Beijing's response
China's Taiwan Affairs Office said the speech "disregards facts, distorts the truth, misleads the public, and reveals ulterior motives," Reuters, Al Jazeera and the Taipei Times reported. The office repeated Beijing's position that Taiwan is part of China and that the island's future must be decided by all Chinese people, including those in Taiwan.
Taiwan's Foreign Ministry urged Beijing to stop hostile rhetoric and to abandon the use of force or coercion to change the status quo, the Taipei Times reported.
Taiwan's Defense Ministry reported 21 Chinese military aircraft and seven navy ships around the island in the 24 hours ending Saturday morning, with 13 aircraft crossing the median line of the strait, according to Al Jazeera.
China held war games around Taiwan after Lai's 2024 National Day speech but not after his 2025 address. Its most recent large drills came in late December, after an $11 billion U.S. arms sale to Taipei, the largest ever, Reuters and Al Jazeera reported.
Washington's position
A senior U.S. administration official welcomed Lai's commitment to peace and said "a routine speech is no justification for aggressive or coercive actions," Reuters reported.
Officials in Washington and Taipei say U.S. policy toward Taiwan has not changed under President Donald Trump, Al Jazeera reported. But Taiwan is still waiting for Trump to approve a second arms package worth about $14 billion, which Al Jazeera reported includes the Patriot air defense system. In May, after meeting Chinese leader Xi Jinping, Trump suggested arms sales to Taiwan could be a bargaining chip, Al Jazeera reported.
Why it matters
Any conflict in the Taiwan Strait would directly affect U.S. security and trade interests. Whether Taiwan's larger budget turns into U.S.-made weapons depends partly on the $14 billion package awaiting Trump's signature.
What's next
Watch for any large Chinese military drills in the coming days, a decision on the pending U.S. arms package, and whether Taiwan's legislature approves Lai's 2027 defense budget.