Taiwan plans to set up domestic production of drones for possible countering China, with $1.6 billion allocated for the project.

"Under the plan, which is backed with public funds of up to NT$50bn (US$1.6bn) over three years, the government aims to organise Taiwanese private drone makers into a “national team” to develop unmanned aerial vehicle systems for several specific missions in a cross-strait war scenario. The government wants the drone makers to start receiving orders by July next year, according to five people familiar with the project," the Financial Times reported, citing sources.

The island's authorities expect that the first orders for the creation of drones will be received by July next year.

The situation around Taiwan deteriorated significantly after the visit of U.S. House Speaker Nancy Pelosi to the island in early August. China, which considers the island one of its provinces, condemned Pelosi's visit, seeing in this step U.S. support for Taiwan separatism, and conducted large-scale military exercises.

Official relations between the central government of China and its island province broke down in 1949 after the defeated Kuomintang forces led by Chiang Kai-shek had moved to Taiwan in the civil war with the Communist Party of China. Business and informal contacts between the island and mainland China resumed in the late 1980s. Since the early 1990s, the two sides have been in contact through nongovernmental organizations - the Beijing Association for the Advancement of Relations across the Taiwan Strait and the Taipei Cross-Strait Exchange Foundation.