Taiwan has ramped up defence spending in the past decade as Chinese military pressure intensified, but US President Donald Trump's administration has pushed the island to do more to protect itself.

Lai said the military aimed to have a "high level" of joint combat readiness against China by 2027 -- which US officials have previously cited as a possible timeline for a Chinese attack on the island.

"The ultimate goal is to establish defence capabilities that can permanently safeguard democratic Taiwan," Lai said at a news conference, after announcing the $40 billion spending plan in a Washington Post opinion piece.

Communist China has never ruled Taiwan, but Beijing claims the island is part of its territory and has threatened to use force to annex it.

China's foreign ministry warned Wednesday that Taiwan's "attempts to resist unification and seek independence through military means will never succeed".

Lai's announcement came as Tokyo and Beijing were locked in a weeks-long diplomatic spat that followed remarks by Japanese Prime Minister Sanae Takaichi suggesting Japan could intervene militarily in any attack on Taiwan.

The United States' top envoy in Taiwan said he "welcomes" the government's spending plan and urged the island's rival political parties to "find common ground" on boosting its defences.

"Whether your priority is preserving Taiwan's democracy and market economy, fostering conditions for cross-Strait dialogue, or maintaining support from the international community, increasing Taiwan's defence capabilities is a necessary precondition," said Raymond Greene, director of the American Institute in Taiwan, Washington's de facto embassy.

Lai said the extra spending would go towards new arms purchases from the United States and enhancing Taiwan's ability to wage asymmetrical warfare.

He said the purchases are not tied to Taiwan's ongoing tariff negotiations with the United States, insisting the main goal was to "demonstrate Taiwan's determination to defend" itself.

"We aim to bolster deterrence by inserting greater costs and uncertainties into Beijing's decision-making on the use of force," Lai said in the Washington Post.

His comments also follow US approval this month for $330 million-worth of parts and components.

Lai's government may struggle to get the proposed spending approved by parliament, where the main opposition Kuomintang (KMT) party, which advocates closer ties with China, controls the purse strings with the help of the Taiwan People's Party.

KMT chairperson Cheng Li-wun, whose recent election to the party's highest post was marred by allegations of Chinese interference, has previously opposed Lai's defence spending plans.

Cheng warned Lai on Wednseday he was "playing with fire" and risked turning the Taiwan Strait into a "powder keg".

- 'Freedom is not a free lunch' -

Lai, who leads the Democratic Progressive Party (DPP), previously planned to boost annual defence spending to five percent by 2030.

The government has also proposed to raise defence spending to NT$949.5 billion ($30 billion), or 3.32 percent of GDP, next year.

The additional spending plan announced Wednesday would be spread over eight years and exceeds the $32 billion previously revealed to AFP by a senior DPP lawmaker.

Lai said the funds would be used to develop the so-called "T-Dome" -- a multi-layered air defence system -- aimed at protecting Taiwanese combat forces, critical infrastructure and civilian buildings from Chinese missiles.

Long-range precision strike missiles, counter-drone systems and anti-ballistic missiles are among the list of items for purchase, the defence ministry said.

Su Tzu-yun, a military expert at Taipei's Institute for National Defense and Security Research, said the spending plan is "what Taiwan requires".

"Freedom is not a free lunch," Su told AFP.

But KMT lawmaker Ma Wen-chun said bolstering national defence was "not about shouting slogans or simply buying more weapons".

Recruiting and retaining more troops was a "far more urgent and important issue" for the military, Ma said.

"In the future we may face a situation where there are no personnel left to operate these weapons."