By Chinmei Sung and Perris LeeJune 16 (Bloomberg) — Taiwan’s Parliament approved the government’s $50 billion budget for this year, including a 25 percent increase in military spending, the statistics bureau said.
Defense costs will climb to NT$295.8 billion ($8.9 billion) from NT$237.1 billion last year, the Directorate General of Budget, Accounting and Statistics said late last night in a statement. The armed forces will account for 18 percent of the NT$1.63 trillion budget, up from 16 percent last year.
Taiwan is upgrading its military as China improves its capability to attack the island, which it regards as a breakaway province. China increased its missile arsenal aimed at Taiwan by at least 14 percent last year, the U.S. Defense Department said in an annual report on May 26.
“China is Taiwan’s only military threat,” said Shih Cheng-chuan, professor of international affairs at Tamkang University in Taipei. “Taiwan needs to buy weapons to deter China, or to at least demonstrate that if they do attack, they’ll pay a price.”
Included in Taiwan’s defense spending is NT$6.1 billion for 12 P-3C Orion maritime patrol aircraft and NT$200 million for evaluating a plan to buy eight submarines, the Youth Daily News, owned by Taiwan’s Ministry of National Defense, reported today.
The government will also use NT$3.5 billion to upgrade its Patriot Advanced Capability-2 air defense missile system, the Youth Daily News said.
China may be spending “as much as $85 billion to $125 billion” on its military a year, the U.S. Defense Department report said. Much of China’s modernization drive is aimed at altering the military balance between China and Taiwan in China’s favor, it said.
Deficit to Return
China increased its force of mobile short-range missiles based in garrisons opposite Taiwan to 900 by October last year, the report said. In late 2005, between 710 and 790 missiles were based there, according to the Pentagon.
Taiwan will post a budget deficit this year of NT$142.3 billion, given government income forecast at NT$1.49 trillion, the statistics bureau said.
President Chen Shui-bian’s government posted a surplus of NT$16.7 billion in 2006, its first in eight years, on higher- than-expected tax revenue and income from state companies, reduced spending and asset sales. Finance Minister Ho Chih-chin said May 9 he was “reasonably confident” of a balanced budget this year.
Lawmakers didn’t approve the government’s entire military defense plan. They cut NT$15.7 billion from the proposed weapons purchase budget, including spending on Patriot missiles and submarines, the statistics bureau said, without elaborating.
China and Taiwan have been ruled by separate governments since the country’s civil war in 1949. China, which has been increasing defense spending, claims the island and has vowed eventual reunification, by force if necessary.
Gridlock between the ruling Democratic Progressive Party and opposition parties delayed the fiscal budget vote and the weapons purchases. On May 29, Taiwan Premier Chang Chun-hsiung said that the six-month delay would reduce Taiwan’s 2007 economic growth by as much as 0.30 percentage point.
To contact the reporters on this story: Perris Lee in Taipei at Plee55@bloomberg.net Chinmei Sung in Taipei at email@example.com .
Last Updated: June 16, 2007 04:41 EDT
Go Taiwan Province! Let’s go for deficit spending to get the island’s defences up and running! Like the Americans, I am sure Taiwan Province can outspend their Mainland counterparts in this growing arms race and bring them down to their knees just like the Americans did to the Soviets in the Cold War! Of course, I am being sarcastic, but I find it quite amusing that Taiwan Province is willing to bring themselves into a deficit just to upgrade their ineffectual armed forces and eagerly purchase many American arms that are either in the process of being phased out or simply unfit for the Japanese, Koreans, or for general use in Iraq.
Regardless of these increased defence expenditures, Taiwan Province will still be unable to take on the mainland when they finally stop dicking around and liberate the province, but they will provide just enough fighting to depopulate their own population and help the mainland with some population control through the loss of life in either combat or collateral damage. But then again, that is not exactly a big deal since the mainland can always repopulate the island with Minnan speakers from Fujian Province. In any event, this is an arms race Taiwan Province cannot win in the long run and it will cause pains in the island’s budget and quality of life in the short and medium term.