Taiwan will introduce a $40-billion supplementary defence budget to underscore its determination to defend itself in the face of a rising threat from China, President Lai Ching-te said on Wednesday.

China, which views democratically-governed Taiwan as its own territory, has ramped up military and political pressure over the past five years to assert its claims, which Taipei strongly rejects.

As Taiwan faces calls from Washington to spend more on its own defence, mirroring US pressure on Europe, Lai said in August he hoped for a boost in defence spending to 5% of gross domestic product by 2030.

Unveiling the T$1.25 trillion ($39.89 billion) package, Lai said history had proven that trying to compromise in the face of aggression brought nothing but "enslavement".

"There is no room for compromise on national security," he said at a press conference in the presidential office.

"National sovereignty and the core values of freedom and democracy are the very foundation of our nation."

Taiwan Defence Minister Wellington Koo said the budget, which will run from 2026-2033, will cover items including missiles and drones as well as the new "T-Dome" air defence system.

Determination to defend itself

Lai, who first announced the new spending plan in an op-ed in the Washington Post on Tuesday, said Taiwan was showing its determination to defend itself.

"It is a struggle between defending democratic Taiwan and refusing to submit to becoming 'China's Taiwan'," he added, rather than merely an ideological struggle or a dispute over "unification versus independence".

Lai had previously flagged extra defence spending, but had not given details.

The de facto US ambassador in Taipei, Raymond Greene, wrote on Facebook that the United States supports Taiwan's "rapid acquisition of critical asymmetric capabilities".

"Today's announcement is a major step towards maintaining peace and stability across the Taiwan Strait by strengthening deterrence," he added.

Taiwan has been modernising its armed forces to push an "asymmetric" approach to warfare to make its forces, which are much smaller than China's, agile and able to pack a greater and more targeted punch.

For 2026, the government plans that such spending will reach T$949.5 billion ($30.3 billion), to stand at 3.32% of GDP, crossing a 3% threshold for the first time since 2009.

The spending will need to be passed by Taiwan's opposition-dominated parliament.

Cheng Li-wun, chairwoman of Taiwan's largest opposition party the Kuomintang, has previously rejected increased defence spending. On Wednesday, she did not directly say the party would vote against the budget, but urged Lai to "step back from the brink".

"I also hope the international community can understand that the people of Taiwan love peace and firmly desire peace. We want to stay far away from the flames of war, we want to avoid war," Cheng told a party meeting.

Lai's announcement comes as China and Japan are embroiled in a bitter dispute about Taiwan, after Japanese Prime Minister Sanae Takaichi said that a hypothetical Chinese attack on Taiwan could trigger Japanese military action.

"Constantly launching multifaceted threats and attacks against neighbouring countries at every turn is not the conduct expected of a responsible major power," Lai said, when asked about the issue and referring to China.

Speaking earlier in Beijing, a spokesperson for China's Taiwan Affairs Office said Taiwan was allowing "external forces" to dictate its decisions.

"They squander funds that could be used to improve people's livelihoods and develop the economy on purchasing weapons and currying favour with external powers," the spokesperson, Peng Qingen, told reporters.

"This will only plunge Taiwan into disaster."

The United States is bound by law to provide Taiwan with the means to defend itself, despite a lack of formal diplomatic ties.

US relations

But since US President Donald Trump took office in January, it approved only one new arms sale to Taiwan, a $330 million package for fighter jets and other aircraft parts announced this month.

The United States plans to ramp up weapons sales to Taipei to a level exceeding Trump's first term, as part of an effort to deter China, two US officials told Reuters in May.

"The international community is safer today because of the Trump administration's pursuit of peace through strength," Lai wrote in the Washington Post.

Lai said Taiwan's ties with the United States were "rock-solid", when asked at the news conference whether he was worried about Trump's visit to China next year, given the improved Washington-Beijing trade relations.

"Recently, before his trip to Asia, President Trump specifically emphasised that 'Taiwan is Taiwan' and President Trump (said he) personally respects Taiwan. These two brief statements say it all," Lai said, referring to comments Trump made while visiting the region last month.

Lai says only Taiwan's people can decide their future. Beijing has rejected his repeated offers of talks, saying he is a "separatist".