Taiwan's Lai vows to show determination to fight as China looms

Cindy Wang and Yian Lee, Bloomberg News on Dec 31, 2024

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Taiwanese President Lai Ching-te vowed to keep increasing the island’s defense spending and display its resolve to fight, as Beijing intensifies drills showcasing its ability to use military force against Taipei.

“Taiwan needs to be prepared for danger in times of peace and must continue increasing its defense budget and strengthen military capabilities, demonstrating our determination to protect the country,” Lai said during his new year’s address in Taipei on Wednesday.

Since Lai’s inauguration in May, Beijing has ramped up pressure on Taiwan with two large-scale military exercises encircling the island. Following his first overseas trip as president in December, which included stopovers in the U.S. territories of Hawaii and Guam, China launched what Taipei called the largest naval deployment in years along the first island chain.

Lai’s vows come as President-elect Donald Trump returns to the White House this month posing fresh uncertainty for Taiwan, a self-ruled democracy that produces the majority of the world’s advanced chips. The Republican has suggested the island “should pay” America for its defense and cast doubt over whether the U.S. would defend Taiwan from any Chinese invasion, as Joe Biden repeatedly pledged.

While Taiwan has already committed to a record military spending in 2025, those plans risk being upended by political turmoil roiling Lai’s first year in office. Opposition camps in the legislature — where his ruling party doesn’t hold a majority — are trying to push through a budget revamp that officials say could slash defense outlay by 28%.

Chinese President Xi Jinping delivered his own annual new year address Tuesday, and reiterated the Communist Party’s position on Taiwan. “No one can ever stop China’s reunification,” he said, alluding to Beijing’s longtime vow to bring the island under its control, by force if necessary.

Drone Development

Lai mapped out his vision for uniting with fellow democratic nations on the development of drones that are now a cornerstone of modern warfare. Taiwan’s Defense Ministry has signed agreements with the U.S. allowing it to buy as many as 1,000 attack drones from AeroVironment Inc. and Anduril Industries Inc. to blunt a potential Chinese invasion.

China’s military has sent drones circling Taiwan in recent years, signaling a new surveillance tactic as cross-strait tensions remain high.

The Taiwanese leader, who Beijing previously branded an “instigator of war,” also joined the chorus of world leaders complaining about China’s glut of cheap exports. A global alliance of trading powers including the U.S. and the European Union have imposed tariffs on a range of Chinese goods over the past year to shield domestic companies.

“Low-price dumping in the red supply chain will have a huge impact on the global market in the future,” Lai said. “We need to jointly build a more resilient democratic supply chain.”

Taiwan isn’t immune from the tariff fever sweeping the world. The island’s significant trade surplus with the U.S. could make it a target for Trump’s proposed tariffs, and the island’s central bank has stated its growth momentum may be affected by supply chain restructuring.