China’s decades-old claim to own Taiwan as its territory is persistently posing a threat to the latter. As China continues to intimidate Taiwan by firing missiles and deploying military aircraft and naval vessels along its borders, Taiwan finds ever-growing need to modernize its current fleet and build a battle-ready armed force to defend itself against any unforeseen aggression. This modernization need will drive Taiwan’s defense budget to record $23.4 billion in 2029, according to GlobalData, a leading data and analytics company.

GlobalData’s latest report, “Taiwan Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2024–29,” reveals that Taiwan’s defense expenditure, inclusive of the additional special budget, grew from $12 billion in 2020 to $19.4 billion in 2024, registering a compound annual growth rate (CAGR) of 12.7%. This growth in budget is primarily due to the necessity to fund major arms acquisition programs by the Taiwanese Armed Forces.

Akash Pratim Debbarma, Aerospace & Defense Analyst at GlobalData, comments: “During 2020-24, Taiwan’s cumulative defense expenditure, inclusive of the additional special budget, was $79.5 billion, which is $15 billion more than the base budget. Out of this additional budget, about $10.5 billion was allocated to the acquisition expenditure. This additional acquisition budget is primarily allocated to fund the ongoing acquisition programs of Hai Kun-class submarines, F-16V aircraft, and 2,500-ton Light Frigates, combined contract value of which is about $22 billion.”

Taiwan’s shift of defense strategy to an asymmetric warfare approach known as the “porcupine doctrine” involves the use of intelligence gathering and reconnaissance tactics and leveraging its geographic and demographic advantages to counter potential Chinese aggression. Taiwan’s approach, backed by the deployment of advanced early-warning systems, sophisticated weaponry, and a ready-to-mobilize reserve force, underscores its efforts towards fortifying its defenses.

Debbarma concludes:“To build its arsenal of weapons and military fleet, Taiwan relies on US assistance to procure advanced defense technologies. For instance, Taiwan’s ongoing procurement of the RGM-84L-4 Harpoon Block-II Coastal Defense Systems and planned procurement of the National Advanced Surface-to-Air Missile System (NASAMS) from the US will help in securing its coast and establish a long-range and multi-domain deterrence mechanism against China. However, Taiwan will likely try to field more indigenous defense platforms in the coming years amid the shifting focus of the US from Asia to Europe due to the Russian invasion of Ukraine.”

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