As Beijing lifts PLA budget, Taiwan spends less on defense

Two years into Taiwanese President Tsai Ing-wen’s tenure, the island’s military is still operating on a shoe-string budget, in the face of more menacing from Beijing.

Figures from Taiwan’s defense ministry reveal the defense budget over the past two years averaged 1.84% of the island’s gross domestic product, falling short of Tsai’s campaign pledge to increase the share of military spending in Taiwan’s economic output to no less than 3%.

The average defense spending over the past two years represents a decline from 2.54% of GDP in 2008.

The defense budget this year is NT$327.8 billion (US$10.73 billion), of which almost half of the outlay, or NT$153.9 billion, will be set aside for pension and personnel expenditures, according to the ministry’s report to the island’s Legislative Yuan.

Had Tsai’s campaign promise been fulfilled, the defense budget this year would be NT$535 billion, according to Taiwan’s Central News Agency.

Across the strait on the mainland, Beijing’s national defense budget this year is set to break the 1.1 trillion yuan (US$175 billion) mark, up 8.1%, or almost 17 times Taiwan’s. That figure is on the conservative side given the fact that Beijing’s military outlays are often camouflaged as something else, like infrastructure, industrial, research and development investment, among other things.

China’s People’s Liberation Army Navy soldiers patrol Woody Island in the Paracel Archipelago in the South China Sea. Photo: Reuters

The People’s Liberation Army’s 2017 budget – about 1 trillion yuan – was equivalent to 1.5% of its GDP that year.

Xinhua said in a commentary in March that China’s defense spending compared to its GDP showed Beijing’s “magnanimity” in its dealings with other nations, plus its commitment to “non-hegemonic, peaceful development” and love of peace.

Still, China has long outspent Russia, India, France, Japan, Germany and others and was second only to the US on a 2016 list of military expenditure compiled by the Stockholm International Peace Research Institute.

In Taiwan, according to analysts, excluding any additional procurement of arms from the US, Taiwan’s military spending is unlikely to reach the 3% goal before the end of Tsai’s four-year tenure, given the island’s flagging economy, revenue shortfalls and the opposition’s efforts to scale down the defense budget during parliamentary deliberations, led by the Beijing-friendly KMT party.

Previously the military had hoped for an increase in the defense budget to NT$360 billion in 2019, or 2% of GDP.

Still, Tsai has vowed to progressively raise defense spending by 2 or 3 percentage points annually from 2019 onwards and assured disgruntled soldiers and veterans that more spending on training and weapon purchases – such as the M1A2 Abrams main battle tanks, an indigenous fast attack missile boat program and a new mobile surface-to-air missile system – would not eat into their pensions and benefits.