Taiwan can well afford ​a $40 billion special defence budget given its booming economy, President Lai Ching-te ‌said on Saturday, citing a US emphasis on collective burden-sharing.

Lai’s proposed spending, which he says is needed to better face a rising threat from China, has been bogged down in parliament, where the ​opposition, which has a majority of seats, complains that the plans are ​unclear and says it cannot sign “blank cheques”.

Marking the 30th anniversary of Taiwan’s ⁠first direct presidential election, when China fired missiles into the waters around the island ​hoping to influence the result, Lai said in a speech that his government was ​determined to defend Taiwan and its hard-won democratic system.

“With Taiwan’s economic growth, we can absolutely afford it,” he said of the eight-year special defence spending plan. “If we look at the United States’ National Security ​Strategy, the US emphasises collective defence and burden-sharing.”

Tech powerhouse Taiwan, the dominant producer of ​advanced semiconductors, has boomed thanks to demand for artificial-intelligence applications. Its economy expanded at its fastest pace ‌in 15 ⁠years in 2025.

The Trump administration has pushed its allies to boost defence spending, something Lai has enthusiastically embraced.

Lai said Taiwan will use AI to establish a real-time defence system while promoting its defence industry. “In other words, our defence budget is not only a ​budget for national defence, ​but also a ⁠budget for economic and industrial development,” he said.

On Friday, parliament authorised the government to sign for some $9 billion in arms deals with ​the United States even though the spending plans have not been ​approved yet ⁠by lawmakers, to ensure contract deadlines are not missed.

China views Taiwan as its own territory and has never renounced the use of force to take the island under its control. ⁠Lai ​rejects Beijing’s sovereignty claims, saying only the island’s people ​can decide their future.

China held its most recent war games around Taiwan in December, and its warships and ​warplanes regularly operate around the island.