Taiwan’s infighting is playing into China’s hands

Taiwan has made impressive strides in enhancing its resilience to Chinese military and economic coercion. But an increasingly polarized political environment threatens to stall and even reverse such progress. 

This is the picture that emerged after a week of meetings in Taipei with current and former officials, scholars, and journalists. Since taking office nearly two years ago, Taiwanese President Lai Ching-te has emphasized resilience as a key component of deterrence. 

Early in his presidency, he established a Whole-of-Society Defense Resilience Committee, which convenes quarterly and includes representatives from government agencies, industry, and civil society groups. 

Military exercises now regularly take place in Taiwan’s cities. They involve the mobilization of reservists, and simulate responses to strikes on critical infrastructure. 

Last week, the tabletop component of Taiwan’s annual Han Kuang military exercise similarly practiced urban resilience and the mobilization of local governments to aid in responding to a contingency situation.

Security council

The importance of resilience is one of the primary lessons Taiwan learned from the war in Ukraine. As the deputy secretary-general of Taiwan’s national security council, Lin Fei-fan, pointed out in Foreign Affairs: 

Ukraine’s resistance has shown that modern deterrence hinges on a society’s capacity to absorb shocks and continue resisting under fire.

The war against Iran has solidified this conviction regarding the significance of resilience. While analysts in Taiwan note the impressiveness of US firepower and military tactical successes, they are equally impressed by Iran’s ability to weather weeks of  bombardment.

They have also taken note of how Tehran continued to launch counterattacks, including those that denied free passage through the Strait of Hormuz. 

Yet the island still has shortcomings when it comes to resilience. It depends almost entirely on imported fuels to meet its energy needs, a vulnerability that the Iran war has magnified.  

Taiwan also relies on 14 international undersea cables to connect to the world, which are vulnerable to disruption, and currently lacks a low-orbit satellite constellation. 

It does not have a significant indigenous defense industry, which would be needed to produce weapons during a contingency. While Taipei has begun to overhaul its military reserves, much more needs to be done to make them a valuable fighting force. 

Taiwan’s government recognizes these vulnerabilities and is working to mitigate them by developing low-orbit satellite providers, taking steps to restart its nuclear power reactors, and encouraging the development of a domestic drone industry.

Artificial intelligence

Aside from progress made in building defense resilience, Taiwan is also buoyed by its newfound status as a technological superpower. As the producer of the world’s most advanced chips, its hardware underpins all investments related to artificial intelligence or AI. 

Put simply, without Taiwan’s chips, progress in AI is not possible. As a principal beneficiary of the boom in AI-related investments, the island’s economy grew by 8.7% in 2025 and is projected to grow by 7.7% in 2026.

There is optimism that economic ties with the United States will deepen, further solidifying Taiwan’s relationship with its principal security guarantor and in turn bolstering deterrence.  

In the past decade, it has gone from being America’s 10th-largest trading partner to its fourth-largest. Washington and Taipei have already reached an Agreement on Reciprocal Trade, and Taiwan is confident that it is well placed among US allies to fulfill investment commitments. 

But growing political polarization on the island threatens to undo much of this progress and ultimately undermine its security. Lai’s proposed US$40 billion special defense budget remains stalled in a legislature controlled by an opposition coalition. 

That money is needed to buy critical arms from the US and send a signal to Taiwanese companies that will spur them to increase manufacturing capacity for missiles and drones. 

Just as important, passing the special defense budget would send a message to the Trump administration that Taiwan is taking its defense seriously and is worthy of additional support. 

Unreliable partner

There are differing views within the opposition Chinese Nationalist Party (KMT) and the Taiwan People’s Party (TPP) on what to include and what to leave out of the defense budget. 

The prevailing view seems to center on funding the $11 billion arms package announced by the Trump administration in 2025 and punting on the rest. At its core, this impasse reflects deep divisions on how to approach China. 

For those who oppose the budget, such spending could provoke Beijing and leave Taipei exposed at a moment when the US is an increasingly unreliable partner. For those who support it, large investments in defense are needed to maintain deterrence.

The deal would also preserve Taiwan’s relationship with its most important ally – the US.

China, for its part, is unsurprisingly attempting to influence this debate. Chinese leader Xi Jinping met with KMT Chair Cheng Li-wun in Beijing to strengthen voices in Taiwan calling for cross-Strait rapprochement and greater distance between Washington and Taipei. 

China’s approach also entails meting out punishments to the Lai administration. The most recent of which successfully pressured countries to not grant overflight rights to Lai’s plane, forcing him to cancel a visit to Eswatini, Taiwan’s lone diplomatic partner in Africa. 

For the remaining two years of his term, China can be expected to impose harsher penalties on the island for taking steps to boost deterrence and build relations with the US and other partners. At the same time, it will dangle benefits should Taiwan reverse course.

A sustainable path for Taipei would be to stand firm on the position that Beijing’s massive military modernization continues to prioritize preparing for a conflict over Taiwan. This requires that it invests in its own defense to maintain some semblance of balance. 

Political parties

By investing in resilience and defense, Taiwan would eliminate coercion and a blockade or invasion as viable options for China, leaving dialogue as the only path forward. Whether its political parties can agree on such an approach, though, is increasingly in doubt.

David Sacks is a fellow for Asia studies at the Council on Foreign Relations.

This work represents the views and opinions solely of the author. The Council on Foreign Relations is an independent, nonpartisan membership organization, think tank, and publisher, and takes no institutional positions on matters of policy. 

This edited article was published by the Council on Foreign Relations under a Creative Commons license. Read the original here. 

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.