Taiwan on Wednesday announced a highly significant increase to a $40 billion defense budget, which it says is necessary in response to growing Chinese military pressure and harassment.

Significantly it comes as nearby US-ally Japan is locked in a diplomatic battle with Beijing over Tokyo's increasingly vocal pro-Taiwan independence stance. China has condemned the growing 'militarism' of Japan regarding Taiwan's status.

The historic increase in the 2026–2033 defense spending plan, projected to cover the next eight years, was framed by President Lai Ching-te said as necessary to defending the island's security as a "non-negotiable".

Lai directly addressed Beijing, emphasizing that the issue is not ideological but rooted in rejecting the characterization of Taiwan as "China’s Taiwan."

Lai further cited Chinese PLA military activities, intensified propaganda operations, and increased espionage and infiltration within and around Taiwan.

The statement reasserted that Beijing’s "one country, two systems" proposal is completely unacceptable to Taiwanese society.

As previously noted, the timing also overlapped with a dispute between China and Japan after Japanese Prime Minister Sanae Takaichi said Japan would likely intervene militarily if China attacked Taiwan.

Beijing responded with economic retaliation and expressed anger after Japan prepared to deploy a missile system on Yonaguni Island, some 70 miles from Taiwan.

Japanese Defense Minister Shinjiro Koizumi, who visited the island, said the deployment preparations were moving ahead steadily. This was seen as an ultra-provocative move by Chinese officials.

China's foreign ministry has grown more and more vocal regarding Japan's staunch pro-independence stance...

Likely China can't help but think that there is a US or Western hidden hand behind Japan's new boldness, especially given Tokyo has so far not backed down despite threatened measures by its top trading partner China, based on total trade value.