Taiwan Passes Landmark Law Shifting Federal funds to Local Governments

The ruling Democratic Progressive Party (DPP) and hundreds of demonstrators fiercely opposed the law passed by Taiwan's opposition parties, which control a majority in parliament, to transfer expenditures from the federal government to local municipalities.

After opposition parties enacted laws requiring a drop in defense budget of about NT$80 billion (US$2.45 billion) at a time when the island is facing an increased Chinese military threat, Taiwan's defense ministry issued a warning about the "serious impact" to security.

The defense ministry said in a statement that in order to fulfill the new financial criteria, it may have to reduce its defense budget plan by 28% for the upcoming year, or around NT$80 billion.

The ministry said, "Major weapon equipment will not be continued to upgrade and it will be difficult to make payments to purchased items according to contracts, resulting in delays or cancellations."

In recent years, China has increased its military efforts to assert its claims over democratically controlled Taiwan, which Taipei strongly denies.

As the island adds more fighter jets and missiles to reinforce deterrence against the growing threat from Beijing, the cabinet in August recommended a 7.7% year-over-year increase in defense spending to NT$647 billion, a record high for Taiwan. The DPP is at odds with the opposition on a number of topics after losing its parliamentary majority in the January elections.