Lai says Taiwan is spending more on defence to deter war; Beijing calls it secessionist

President Lai Ching-te said in a National Day speech that Taiwan is boosting defence spending to deter war with China³. Taiwan is ramping up defence spending and modernising its armed forces, according to accounts of the speech^1,2. Speaking outside the Presidential Office, Lai said peace cannot rely solely on wishes².

Lai said China has exerted pressure in an attempt to change the status quo across the Taiwan Strait, and that the island’s resolve is not only about a point the excerpt cuts off⁴. He said he would act on a commitment the excerpt also leaves incomplete⁶.

Beijing answered the same day. Zhang Han, a spokeswoman for China’s State Council Taiwan Affairs Office, accused Lai of seeking to advance Taiwan independence⁵, and said his speech disregarded facts and distorted matters in a passage the excerpt cuts off⁷. A Chinese state commentary said the Taiwan leader’s repackaged rhetoric cannot conceal what it called his secessionist agenda, and argued that differences in political systems are neither an obstacle to China’s reunification nor an excuse for splitting the country⁶.

Why it matters to investors

Taiwan’s defence budget and Beijing’s response are the two public inputs available for pricing the risk that sits under the world’s semiconductor supply. One is a spending decision, the other is official rhetoric, and this week both moved in the same direction^3,5.

The Chinese statements here are the positions of the Chinese government and its state media, not independent findings about Lai’s intentions^6,7. The Taiwanese claims about pressure across the strait are likewise the Taiwanese president’s account⁴.

What neither side gives is a number. None of these reports puts a figure on the increase in Taiwanese defence spending, or on the timetable for the modernisation Lai described^1,2.

What to watch

Watch for the budget itself. A speech that commits to ramping up spending and modernising the armed forces has to pass through a legislature, and the reporting of the speech does not say it has^1,2.

Watch the official channel in Beijing. The Taiwan Affairs Office is the body that speaks for the mainland on this, and its spokeswoman has now put the independence charge on the record^5,7.

And watch the language. Lai framed the spending as deterrence rather than confrontation, saying peace cannot rely solely on wishes, while Chinese state commentary framed the same speech as a secessionist agenda^2,6. The gap between those two readings is the political risk.