Taps Coogan – August 25th, 2021

Enjoy The Sounding Line? Click here to subscribe for free.

Amid a massive Chinese naval buildup, frequent drilling to simulate amphibious assaults, and a diplomatic pressure campaign to isolate Taiwan, it’s no secret that the Chinese Communist Party (CCP) wants to capture neighboring democracy Taiwan. Indeed, top CCP leadership routinely pledge ‘reunification’ by any means.

Taiwan has no formal defense allies, only an ambiguously defined US defense backing. The US is the only major arm’s supplier that will sell to Taiwan.

In light of that, one might expect that Taiwan would have a long standing policy of spending heavily in its defense, like nearby South Korea, which has long invested around 2.5% of its GDP on defense.

The following chart shows Taiwan’s defense spending as a percent of GDP since 2011.

Despite years of proclamations that it will spend more on defense, when push comes to shove, Taiwan still spends less than 2% of GDP on its own defense. For perspective, Taiwan’s defense budget in 2020 ($11.6 billion) was smaller than the Netherland’s, an equivalently sized country surrounded on all sides by NATO and EU allies.

Since 2018, defense spending relative to GDP has increased at President Tsai Ing-wen’s urging. However, in 2021, Taiwan is likely to increase defense spending by 4.4%, less than its anticipated GDP growth. In other words, Taiwan’s defense spending ratio is likely to fall further. If Taiwan were in NATO, it wouldn’t be meeting its defense spending obligations.

The US spends over 3.5% of GDP on defense and has spent at least 3% every year since World War II. Providing a defense umbrella to wealthy democracies around the world is an expensive business.

As the US debates the best way to deter an increasingly likely Chinese invasion of Taiwan, Taiwan serves as yet another reminder of the rule that nothing degrades a country’s willingness to invest in their own military capabilities faster than a US defense backstop.

Would you like to be notified when we publish a new article on The Sounding Line? Click here to subscribe for free.