Taiwan’s defense deadlock is fueling China fears

Taiwan’s scaled-back defense spending highlights the strategic costs of divided government. Last month, a compromise by the legislature in Taipei pushed through the NT$780 billion, or US$24.9 billion, special defense budget.

This figure was far below the US$40 billion requested by President Lai Ching-te’s administration. The bill formalizes a restrictive oversight framework that replaces long-term strategic investment with continuous parliamentary approval.

By conditioning future procurement on official US Letters of Offer and Acceptance, the legislature has signaled a structural shift in Taiwan’s defense posture. It is one that creates a deterrence deficit at a time of intensifying regional pressure.

The struggle by the Democratic Progressive Party, or DPP, to secure its original proposal reveals a widening gap between public sentiment and legislative leverage. 

Public opinion polls consistently show over 60% support for the special defense package, reflecting stronger Taiwanese identity and public resolve for self-defense. But this popular mandate has failed to translate into political pressure on the opposition. 

Public sentiment

This disconnect stems from institutional realities. At the electoral level, the failed Grand Recall campaign of 2025 showed that local patronage networks and pressing domestic concerns insulate district-level lawmakers from national security debates. 

The opposition coalition has also neutralized key institutional checks. They included stalling Constitutional Court appointments, which has effectively removed the primary referee for executive-legislative disputes. 

As a result, the Lai administration has been unable to convert broad public sentiment into meaningful accountability for legislators who stall executive agendas with relative impunity. 

The Kuomintang or KMT, the opposition party, has also struggled to reconcile its diverse factions into a unified national security vision. This internal fragmentation directly shaped the final budget outcome. 

In the early stages of the debate, a consensus appeared to form around legislator Hsu Chiao-hsin’s more balanced US$25.3 billion proposal, supported by senior figures like Legislative Yuan Speaker Han Kuo-yu and potential 2028 presidential contender Lu Shiow-yen.

This middle ground collapsed following KMT Chairperson Cheng Li-wun’s visit to China, which signaled a hardline pivot towards a more restrictive “US$12 billion) plus N” formula. The shift was not merely a policy change. It became a public proxy war for the party’s soul. 

The tension peaked when KMT Deputy Chair Chi Lin-lien suggested Han be expelled for his pro-defense alignment. To salvage party unity, the KMT engineered the final US$24.9 billion compromise by splitting the budget. 

It approved funds strictly for American arms procurement to appease Washington and moderate voters while defunding the DPP’s domestic defense initiatives. This split allowed hardliners to claim a political victory by slashing the executive’s original request.

Yet this effectively weaponized fiscal oversight to stall indigenous deterrence programs without entirely abandoning a pro-United States defense posture.

Security audits

The most critical casualty of the deadlock is Taiwan’s deterrent signaling. The shift to fragmented annual approvals highlights a lack of national resolve. This is particularly dangerous as global demand for US defense systems grows. 

As American Institute in Taiwan Director Raymond Greene warned, delays in passing a comprehensive budget could jeopardize Taiwan’s standing in the global American defense production queue.

The final bill also excludes long-term initiatives and security audits intended to help domestic firms join “non-red” global supply chains designed to reduce reliance on China. 

By prioritizing immediate oversight over long-term industrial integration, the legislature is slowing Taiwan’s path towards defense self-reliance. In the Taiwan Strait, political friction is not just a domestic nuisance. It is a vulnerability that Beijing is well positioned to exploit. 

To break this gridlock, the executive must use financial transparency and communication as a unified tool aimed at the general public and the KMT’s moderate, pro-US faction. 

Proactively publishing financial ledgers and acknowledging cost overruns would provide opposition moderates with the fiscal oversight victories they need to break from hardliners, while building civic trust without risking technical leaks. 

This transparency must be paired with an inclusive sovereignty narrative. By reframing defense spending as a unifying investment rather than a polarizing “China versus Taiwan” ideological battle, the administration can build public support and ease cross-party friction.

Combining targeted fiscal transparency with a less combative security narrative would depoliticize the budget and strip hardline lawmakers of the political cover required to indiscriminately block funds.

Partisan battles

In the long term, depolarized communication could restore public trust in indigenous defense programs and create space for genuine oversight. A healthier atmosphere would allow bipartisan civil society and minor parties to serve as credible arbiters of defense procurement.

By institutionalizing transparency through diverse actors rather than relying on partisan committee battles, the government can eventually bypass politically motivated obstruction. 

An oversight system grounded in public trust, expert arbitration and a unified narrative of national resilience will ensure that Taiwan’s strategic defense planning is no longer a casualty of two-party deadlock.

Cho-Han Hsiung is Non-Resident Fellow at Dialogue China, which is based in Washington.

This edited article is republished from East Asia Forum under a Creative Commons license. Read the original article 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.