During a press conference Thursday following a high-level security meeting, Lai outlined 17 major strategies to protect Taiwan against China's threats.
"We have no choice but to take even more proactive measures," he said.
"It is time we adopt proper preventive measures, enhance our democratic resilience and national security and protect our cherished free and democratic way of life."
Despite Taiwan having never been a part of the People's Republic of China, which was founded in 1949, Beijing sees the island of 23 million as a breakaway province and has vowed to take it back by force if necessary.
China in recent years has been ramping up its destabilizing efforts in Taiwan.
Lai told reporters during the press conference that China has been exerting its influence on current and former military personnel to spy on their homeland for Beijing, encouraging Taiwanese businesses and workers to seek out the mainland and entice Taiwanese citizens to apply for permanent residence "in an attempt to muddle Taiwanese people's sense of national identity."
Among the preventive measures Lai mentioned were increased oversight and monitoring of travelers and workers to China and Chinese coming to Taiwan. He said Chinese nationals applying for permanent residence must relinquish their existing household registration, passport and must not hold dual status.
Because there has been an increase in military infiltration issues, Lai called for several legal amendments including punishments for military personel who express "loyalty to the enemy."
"China has been taking advantage of democratic Taiwan's freedom, diversity and openness to recruit gangs, the media, commentators, political parties and even active-duty and retired members of the armed forces and police to carry out actions to divide, destroy and subvert us from within," he said.
"As we face increasingly severe threats, the government will not stop doing its utmost to ensure that our national sovereignty is not infringed upon."
China was quick to respond by accusing Lai of seeking personal gain, without providing proof, while saying he was "acting against the tide of history."
"We sternly warn Lai Ching-te and his administration: those who play with fire will only burn themselves," Taiwan Affairs Office of the State Council said in a statement.
"Those who forget their roots have never met a good end; those who betray their country will be despised by the people and judged by history; those who engage in 'Taiwan independence' separatism will be doomed to destruction; and those who act against the will of the people and defy global norms will bring about their own downfall."
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