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Taiwan is spending more to defend itself, Beijing is probing for openings in Seoul, and Washington is trying to negotiate with its adversaries without weakening confidence among its partners. Together, this week’s developments reveal a regional struggle over the credibility of American power.
This week brought significant developments across the region, including Taiwan’s record defense budget, Wang Yi’s visit to Seoul, and President Trump’s decision to scale back U.S.-South Korea military exercises.
China is applying sustained military and political pressure while seeking weaknesses in the relationships underpinning the current Asian security order. The United States remains the region’s most powerful military actor, but its policy is becoming more transactional and less predictable. Allies and partners are therefore trying to determine which American commitments are durable, which are conditional, and which might be altered to secure a trade agreement, diplomatic summit, or breakthrough with an adversary.
Taiwan’s response is to invest more heavily in its own defense. Beijing’s response is to encourage South Korea to place a greater distance between itself and Washington. North Korea is testing whether a reduction in allied exercises reflects a deeper weakening of deterrence.
Taiwan is turning anxiety into defense spending
Taiwan’s cabinet has approved a record defense budget for 2027, increasing planned spending by 18.2 percent to between NT$1.12 trillion and NT$1.123 trillion, or approximately US$35.1 billion to US$35.3 billion. It is the first Taiwanese defense proposal to cross the NT$1 trillion threshold.
The increase is a direct response to the military environment around the island. PLA aircraft, naval vessels, and coast guard ships now operate near Taiwan with growing frequency. Since 2022, Beijing has also conducted repeated large-scale exercises that rehearse elements of a blockade, encirclement, and joint military campaign.
Each exercise gives the PLA another opportunity to gather intelligence, practice coordination, and make elevated military pressure appear routine. It also forces Taiwan to spend money and operational energy responding to Chinese activity that remains below the threshold of open war.
President Lai Ching-te has pledged to keep defense spending above 3 percent of GDP and raise it to 5 percent by 2030. Under the government’s NATO-comparable calculation, which includes the Coast Guard, military pensions, and special defense funds, the 2027 proposal would equal 3.01 percent of projected GDP. It would also account for nearly 29 percent of Taiwan’s central government budget.
The largest single increase is in military investment, which would rise by NT$97.5 billion to NT$259.1 billion. That money is intended to support weapons, ammunition, military operations, drones, missiles, and other capabilities designed to make Taiwan more difficult to blockade or invade. A substantial share will also cover scheduled payments for American arms packages that have already been approved.
The scale of the proposal reflects more than fear of the PLA. It also reflects Taiwan’s reading of American politics.
Washington has repeatedly pressed Taipei to spend more on defense and assume greater responsibility for its own security. That expectation is reasonable. Taiwan needs larger ammunition reserves, more mobile missile systems, cheaper drones, stronger coastal defenses, better-protected communications, and forces that can continue operating even after airfields, ports, command centers, and civilian infrastructure have been attacked.
For years, Taiwan’s defense planning was criticized for favoring expensive conventional platforms over resilient systems suited to an asymmetric campaign. The new budget suggests that Taipei is beginning to take those warnings more seriously.
Under President Trump, however, American support is often expressed in explicitly transactional terms. Taiwan’s security is discussed alongside its defense spending, semiconductor production, trade balance, and purchases of American weapons. That rhetoric creates the impression that U.S. support must be continually earned through financial or economic concessions.
Taipei is therefore buying two forms of insurance. The military investment is intended to impose higher costs on a Chinese attack. In contrast, the political investment is meant to show Congress and the White House that Taiwan is not waiting passively for the United States to rescue it.
The difficulty is that a record budget does not automatically create a more capable military. Taiwan’s opposition-controlled legislature must still approve the proposal. The previous budget took nearly a year to pass. It was subjected to deep cuts, raising doubts about whether the full buildup of ammunition, missiles, drones, and asymmetric systems will proceed on schedule.
Procurement delays are another concern. Weapons may arrive late, new systems may not be properly integrated, and maintenance or training may receive less attention than high-profile purchases. Taiwan can announce a large budget, but deterrence will ultimately depend on whether that money produces dispersed stockpiles, survivable command networks, functioning equipment, trained units, and sufficient endurance for a prolonged conflict.
Even with those limitations, the political direction is clear. Taiwan is converting strategic anxiety into procurement dollars as Chinese pressure rises and American policy becomes harder to predict.
Washington’s unpredictability is giving Beijing room in Seoul
While Taiwan is responding to uncertainty by spending more, China is using the same uncertainty to improve its position in South Korea.
Chinese Foreign Minister Wang Yi made his first standalone visit to Seoul in five years. In meetings with President Lee Jae-myung, Foreign Minister Cho Hyun, and National Security Adviser Wi Sung-lac, Wang conveyed greetings from Xi Jinping and encouraged South Korea to pursue a friendly, non-bloc policy toward China.
Beijing wants Seoul to avoid becoming firmly embedded in a U.S.-led coalition intended to constrain Chinese influence. It is particularly concerned about American efforts to coordinate regional policy on Taiwan, advanced technology, semiconductor controls, missile defense, and military cooperation among the United States, South Korea, and Japan.
President Lee emphasized the full recovery of China-South Korea relations and called for closer coordination on Korean Peninsula issues. He also raised the possibility of multiparty talks that could eventually replace the Korean War armistice with a more permanent peace regime.
China’s appeal has obvious limitations. South Korea depends on its alliance with the United States to deter a nuclear-armed North Korea, while Beijing has repeatedly shown that it is unwilling to impose serious costs on Pyongyang. Seoul may want better relations with China, but it has little reason to view Beijing as a substitute security partner.
President Trump nevertheless gave Wang an opening by abruptly ordering the Pentagon to “substantially reduce” the annual Ulchi Freedom Shield exercises.
The drills were shortened from 11 days to five. Many live-fire components were canceled or transferred into simulations, and the counteroffensive phase was removed. Trump reportedly cited the cost of the exercises, his relationship with Kim Jong Un, and South Korea’s refusal to participate in U.S. actions against Iran.
There may be a legitimate diplomatic argument for adjusting the exercises. Military drills should support strategy rather than continue unchanged by habit. If a temporary reduction can open a realistic channel to Pyongyang, testing that possibility may be worthwhile.
The problem lies in how the decision was made. South Korean officials publicly indicated that they had received no warning of Trump’s directive.
An alliance depends on consultation as much as it depends on troops, weapons, and treaties. When Washington changes a major element of combined readiness without first coordinating with Seoul, it suggests that South Korean security arrangements can be altered to serve a separate American negotiation.
That perception was useful to Beijing. Wang could present China as an advocate of consultation, communication, and regional stability at the same moment that Washington appeared to be revising alliance policy unilaterally.
China does not need South Korea to abandon the United States. Such a goal would be unrealistic. Beijing benefits if Seoul becomes more hesitant about supporting U.S. policies on Taiwan, export controls, regional missile defense, or trilateral security cooperation with Japan.
A small amount of doubt can produce meaningful political distance. That is the opening Beijing is trying to widen.
North Korea tested the diplomatic theory immediately
The response from Pyongyang came shortly after Wang completed his meetings and left South Korea.
North Korea launched more than 10 short-range ballistic missiles from the Pyongyang area toward the East Sea. The missiles traveled approximately 300 kilometers.
Kim Yo Jong had already dismissed the reduced exercises as insufficient, indicating that Pyongyang did not regard Washington’s decision as a meaningful change in U.S. hostility. China offered no public criticism of the launches.
The timing does not establish coordination between Beijing and Pyongyang, but it does expose the risk in expecting unilateral restraint to produce an immediate reciprocal response.
Washington reduced the duration and scope of its exercises, yet North Korea answered with another missile demonstration. China, meanwhile, was able to call for dialogue without imposing any visible cost on Pyongyang for escalating the situation.
The reduction in exercise may still create space for future talks between Trump and Kim Jong Un. Diplomacy with North Korea has repeatedly stalled, and a change in approach may be necessary. The concern is that Washington reduced a visible element of allied readiness before securing any North Korean commitment in return and apparently without consulting Seoul.
Other regional governments will watch this closely. Japan, Taiwan, and the Philippines will not view Ulchi Freedom Shield as an isolated Korean Peninsula issue. They will ask whether American military posture is being managed through a coherent regional strategy or adjusted according to short-term political considerations.
China will make the same assessment. If Beijing concludes that alliance commitments can be weakened through cost complaints, personal diplomacy, or disputes unrelated to regional defense, it will have an incentive to apply pressure at those points.
The P-8 transit highlighted both American presence and absence
A U.S. Navy P-8A Poseidon maritime patrol aircraft flew through the Taiwan Strait on August 21, using international airspace in a mission the Seventh Fleet said demonstrated Washington’s commitment to a free and open Indo-Pacific. Chinese forces tracked the aircraft throughout the transit and later described the situation as under control. American ships and aircraft conduct such passages periodically to challenge Beijing’s attempt to treat the strait as a space in which China can restrict foreign military activity. The timing was also significant because Xi Jinping is expected to visit Washington for talks with President Trump. Reuters reported the transit on August 22. China has imposed serious restrictions on rare-earth minerals on U.S. businesses while competing intensely for access to advanced semiconductor chips.
The flight was a visible demonstration of continued American access, but it also drew attention to what was missing from the region. The USS George Washington, the Navy’s forward-deployed carrier based in Japan, had been redirected to the Middle East to relieve the long-deployed USS Abraham Lincoln. Its departure left the Western Pacific without a U.S. aircraft carrier, at least temporarily, while the Theodore Roosevelt remained in San Diego following the Rim of the Pacific exercise. The George Washington entered the U.S. Central Command area on August 19 with the cruiser USS Robert Smalls and destroyer USS Shoup. USNI News confirmed its arrival in the Middle East.
A carrier is not the only measure of American combat power, and its temporary absence does not mean the United States has abandoned the Western Pacific. The Seventh Fleet retains submarines, destroyers, aircraft, bases, and access to allied facilities throughout the region. Even so, the contrast carries political weight. Washington flew a surveillance aircraft through the Taiwan Strait to affirm its presence at the same moment that demands in the Middle East had pulled its most visible symbol of naval power away from Asia.
I view the P-8 plans transit — which have become rare in the second Trump presidency — as a signal to Beijing that it shouldn’t assume that Trump has shifted his position on China. Meanwhile, these missions are conducted to collect data near the Taiwan Strait; they may be a response to certain military developments linked to the Taiwan Strait and the South China Sea. China’s latest aircraft carrier, the Fujian, was seen south of Yulin Naval base on August 14 and 21. We have also heard about China’s intense construction activity at Antelope Reef, west of Sanya, which was in the news.
This helps explain why Taiwan’s defense budget cannot be viewed solely as a response to the PLA. Taipei is also watching how American forces are divided between theaters. The P-8 transit showed that the United States remains willing to operate in contested areas, but the carrier gap demonstrated the limits of sustaining a powerful presence in Asia while simultaneously supporting an extended conflict in the Middle East. For Taiwan and other regional partners, the question is not whether the United States can still appear in the region. It is whether Washington can maintain sufficient forces there when several crises demand attention at once.
Beijing’s strategy is to work at the edges of confidence
These developments show how the regional contest is unfolding below the threshold of a confrontation.
Around Taiwan, Beijing is using aircraft, warships, coast guard vessels, and military exercises to exhaust the island, normalize PLA activity, and test whether foreign support will weaken over time. In South Korea, Chinese diplomacy is taking advantage of alliance friction to encourage greater distance from Washington. On the Korean Peninsula, Pyongyang is testing whether reduced exercises indicate a more durable decline in U.S. resolve. In bilateral diplomacy, China is forcing Washington to balance the protection of detained citizens against its desire for a stable summit with Xi.
None of these efforts requires a decisive Chinese victory. Beijing benefits from smaller changes that accumulate: a Taiwanese procurement program delayed by domestic politics, a South Korean government that consults Washington less confidently, a military exercise reduced without allied agreement, or an American administration that treats security commitments as negotiable instruments.
This is why transactional diplomacy can impose strategic costs even when it produces short-term savings or concessions.
Taiwan should spend more on its defense, and South Korea should contribute meaningfully to the alliance. Military exercises can be adjusted when circumstances change. Washington should also negotiate with Beijing and Pyongyang when diplomacy offers a plausible way to reduce risk.
Those decisions become dangerous when allies do not understand the strategy behind them or discover that the terms have changed without consultation.
Regional confidence is shaped by the accumulated effect of such choices. Wang Yi’s visit became more consequential because it coincided with an American decision that unsettled Seoul. North Korea’s missile launches showed that reducing exercises did not automatically produce restraint. Min Zin’s designation placed the safety of an American citizen directly inside the diplomacy of an expected Trump-Xi summit. Taiwan’s defense budget, meanwhile, revealed how a partner prepares when it believes American support remains vital but may no longer be unconditional.
Taken together, the developments show that governments are judging U.S. credibility through behavior rather than speeches. They are watching whether Washington consults its allies before changing military policy, follows through on weapons deliveries, protects its citizens, and responds consistently to coercion while negotiating with Beijing and Pyongyang.
Deterrence depends partly on weapons, troops, budgets, and industrial capacity. It also depends on expectations. China, Taiwan, North Korea, South Korea, and Japan are constantly estimating what the United States is likely to do during a crisis.
When Washington becomes less predictable, partners hedge and adversaries test. Beijing then gains an opportunity to present itself as the steadier actor, even though Chinese military and political pressure helped create the region’s insecurity.
The central question is no longer simply whether the United States has enough power to compete with China. It is whether American power is being used consistently enough for allies, partners, and adversaries to make reliable decisions around it.
That contest over confidence may prove as consequential as the region’s visible buildup of ships, missiles, drones, and military budgets.
Additional reading
China’s Next Aircraft Carrier Is Taking Shape — The War Zone, August 22
Taiwan Cabinet Approves Record $35.1 Billion for Defense in 2027 — Bloomberg
Taiwan proposes record US$35b defence budget for 2027 as PLA’s pressure grows — South China Morning Post
EXCLUSIVE: US designates American held by China as wrongfully detained — Reuters
US designates academic Min Zin as ‘wrongfully detained’ in China — South China Morning Post
US, South Korea to cut length, scope of military drills after Trump order — Reuters
North Korea fires 10 missiles day after Trump curtails South Korea joint drills — The Guardian
Commentary: Arunachal Pradesh border dispute looms over thaw in China-India ties — CNA