China & Taiwan Update, August 28, 2026

Key Points:

• Taiwan’s Legislative Yuan approved a NT$240 billion (US$7.3 billion) six-year budget focused on unmanned systems development, emphasizing domestic drone industry growth and establishing a National Unmanned Vehicle Industry Development Strategy Special Committee for policy coordination.
• The Ministry of Economic Affairs will oversee the budget and set standards for indigenous drone systems, while the Ministry of National Defense handles military procurement; the bill includes an annual spending cap of NT$40 billion, which has drawn criticism for potentially delaying drone acquisitions.
• Separately, Taiwan contracted US firm Anduril for 1,554 Altius-700M strike drones and 478 Altius-600ISR reconnaissance drones, enhancing capabilities beyond Taiwan’s planned indigenous drones, highlighting ongoing reliance on advanced US defense technology.
• China’s PLA conducted long-range exercises in Egypt with J-16 fighter jets engaging Western-designed Rafale aircraft, demonstrating power projection and military-diplomatic ties ahead of Xi Jinping’s state visit to Egypt.
• The US Department of Justice seized domains linked to PRC-sponsored cyberattacks targeting US government agencies, part of ongoing efforts to counter Chinese cyber threats; meanwhile, China threatened countermeasures against new US secondary sanctions targeting entities involved in Iran trade, underscoring tensions over sanctions enforcement.