Taichung, Taiwan - Taiwan should rely on drones as a deterrent against a possible Chinese attack, the top US diplomat to the island said on Thursday.

"Nothing will deter conflict more effectively than turning Taiwan into a hornet’s nest of air, surface, and subsurface drones," said Raymond Greene, director of the American Institute in Taiwan and the de facto US ambassador, at a drone forum in Taichung.

Greene also raised the possibility of closer cooperation with the US, including Taiwanese investment in the American drone industry. He said US–Taiwan cooperation in drone development could create a solid production base for the so-called democratic world, reduce the risk of supply chain disruptions, and strengthen the overall deterrence capabilities.

To boost the drone industry, the Taiwanese government proposed a special budget in mid-June covering the period from August 2026 to December 2031, with a ceiling of up to 210 billion Taiwan dollars ($6.6 billion US dollars).  The plan includes coastal surveillance drones, coastal strike drones, and small unmanned suicide boats.

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However, parliamentary approval is still required.  The largest opposition party Kuomintang, which holds a majority in the legislature, has put forward a counterproposal with a higher ceiling of 240 billion Taiwan dollars over six years, to be funded through the regular budget rather than a special one. 

The legislature is set to hold its first review of the competing proposals on Friday.

The US, which does not maintain official diplomatic relations with Taiwan but is its main security partner, plays a central role in Taiwanese defense.

China claims Taiwan as part of its territory. The island has been governed independently for decades by a democratically elected government.

Chinese President Xi Jinping has recently reiterated an intention to "reunify" Taiwan and has not ruled out the use of force if necessary.