Beijing has framed the drills as a warning after the U.S. approved the sale of $11 billion in weapons to Taipei.

Taiwan’s armed forces and coast guard were on “high alert” on December 29, its defense ministry said, in response to military drills being carried out by China.Taiwan’s Ministry of National Defense said “Rapid Response Exercises” were being performed in response to China’s drills.

The second day of the large-scale war games, called “Justice Mission 2025,” saw the Chinese military encircle Taiwan on Tuesday.

China launched live-fire drills around Taiwan that it said would simulate a blockade of the self-ruled island's key ports, prompting Taipei to condemn Beijing's "military intimidation."

China's foreign ministry said the sanctioned firms and individuals would have their assets within China frozen.

Beijing has imposed sanctions against 20 US defence firms and their executives in response to Washington’s massive arms sale package to Taiwan last week. The sales, if approved by the US Congress, would mark the largest-ever US weapons package to Taiwan,

Lai recently told the media that Taiwan must pursue "peace through strength" and reaffirmed what he called a "rock-solid" relationship with the US, alongside plans to push forward a $40 billion arms procurement.

In a war with China, Taiwan could have an asymmetric advantage with a high volume of cheap and survivable weapons, a retired admiral said.