Taiwan's President Tsai Ing-wen said Monday she is seeking to ramp up spending on the armed forces, as relations with China deteriorate.
Her proposal to increase the 2019 defence budget by 5.6 percent to Tw$346 billion ($11.3 billion) will go before parliament following the summer recess.
Beijing sees democratic self-ruling Taiwan as part of its territory to be brought back into its fold, by force if necessary.
China has stepped up pressure on Taiwan since Tsai came to power two years ago, as her government refuses to acknowledge the island is part of "one China".
It has staged a string of air and naval exercises, including a live-fire drill in the Taiwan Strait in April, which Chinese officials said were aimed at Taiwan's "independence forces".
"There have been many changes in international and regional situations and our national security is faced with more obvious and complicated threats," Tsai said Monday as she attended a naval ceremony and announced the defence spending plan.
Up Tw$18.3 billion from the previous year, it would account for 2.16 percent of the GDP.
The 2018 defence budget was only up 1.9 percent on the year before, at Tw$327.7 billion.
Around a fifth of the 2019 budget would be spent on "defence self-sufficiency" projects, Tsai said.
Taiwan wants to beef up its homegrown defence systems, particularly its submarines.
The United States government this year approved a licence required to sell submarine technology to Taiwan, part of warming relations between the two sides.
Although the US does not have official diplomatic relations with Taipei after switching recognition to Beijing in 1979, it remains Taiwan's most powerful ally and arms supplier.
A long-stalled offer approved by then US president George W Bush in 2001 to supply eight conventional submarines has never come to fruition.
Last year, Taiwan also announced its bid to create a new generation of locally built jet trainers by 2026.