Beijing launched missiles and deployed dozens of fighter jets, navy ships and coastguard vessels this week to encircle Taiwan's main island, in exercises condemned by Taipei "as highly provocative".

China claims democratic Taiwan is part of its territory and has threatened to use force to annex it.

"My stance has always been clear: to steadfastly defend national sovereignty, strengthen national defence and whole-of-society resilience, comprehensively establish effective deterrence capabilities, and build robust democratic defence mechanisms," Lai said in a televised address from the Presidential Office.

Lai said the government would "build a safer and more resilient Taiwan", a day after China declared it had completed the drills around the island.

"In the face of China's escalating expansionist ambitions, the international community is closely watching whether the people of Taiwan have the determination to defend themselves," Lai added.

China's show of force follows a bumper round of arms sales to Taipei by the United States, Taiwan's main security backer, and comments from Japan's prime minister that the use of force against Taiwan could warrant a military response from Tokyo.

Lai said international support for Taiwan "has never wavered", which signalled that "Taiwan is no longer just Taiwan".

"We are not only indispensable, we are also a trustworthy, responsible force for good in the international community," he said.

Lai's speech capped a dramatic few weeks in Taiwan, with a deadly metro stabbing attack in Taipei that left three people dead and a deepening domestic political crisis.

The opposition-controlled parliament has stymied passage of the government's annual budget and an additional $40 billion defence spending bill aimed at developing an integrated air defence system.

The Kuomintang party (KMT) and the Taiwan People's Party are furious after Premier Cho Jung-tai, who belongs to Lai's Democratic Progressive Party, refused to sign opposition-backed amendments to a revenue-sharing bill, preventing them from taking effect.

Lai publicly supported Cho's decision, further enraging opposition parties, which have launched impeachment proceedings against them.

"I hope that our ruling and opposition parties can stand united," Lai said.

"Only through unity not division can we avoid sending the wrong signals to China that it could invade Taiwan."