Taiwan President Lai Ching-te called on regional democracies to unite against threats to stability, citing pressure from Beijing and concerns that Donald Trump's rapprochement with China could come at Taiwan's expense. Lai welcomed U.S.-China dialogue but stressed that maintaining peace requires a correct understanding of history. Democracies in the Indo-Pacific must join forces to ensure the status quo is not changed.
Lai's speech follows Trump's summit with Chinese President Xi Jinping, where the two leaders agreed to mutual tariff cuts and Xi urged Washington to oppose Taiwanese independence. Senior Taipei officials fear Taiwan could be "on the menu" in Trump's talks with Xi, especially as his administration has held up a potentially $14 billion arms package. Washington has continued engagements with Taipei, allowing visits from former President Tsai Ing-wen and opening a new representative office.
Lai proposed a record NT$1.12 trillion ($35 billion) defense budget for 2027 and pledged to raise defense spending to 5% of GDP by 2030. Beijing considers Taiwan part of its territory and has vowed to bring it under control by force. Taiwan is strengthening its domestic drone industry and investing in missiles and air defense systems.
The military has introduced more realistic exercises, including unscripted combat scenarios and simulated internet disruptions. Lai also pledged to ensure economic growth benefits reach people through higher wages and expanded welfare. Taiwan's economy enjoys its strongest expansion in decades, fueled by AI-driven semiconductor exports.
The government raised its 2026 growth forecast to 11.05%, the fastest since 1987. National Day marked the 30th anniversary of Taiwan's first direct presidential election in 1996. Lai said the anniversary demonstrated Taiwan's future belongs to its people, reiterating a position that puts him at odds with Beijing's claims. "Taiwan cherishes peace, but we will not give up our freedom," he said. "We are open to exchanges, but will not accept subordination.".
Source: Bloomberg Markets · Summarized by HeadlinesBriefing