Japan Approves Record Defence Budget Amid Rising Tensions with China
Japan's Cabinet has sanctioned a record defence budget exceeding ¥9 trillion (approximately $58 billion) for the 2026 fiscal year. This significant increase in military spending comes as regional tensions, particularly with China, continue to rise. The proposed budget reflects a 9.4% increase from the previous year and pushes forward Tokyo's objective to elevate defence spending to 2% of its GDP, a target the government now plans to achieve two years ahead of schedule.
Under the leadership of Sanae Takaichi, the government is committed to boosting Japan's defensive capabilities, including coastal defences, to address pressures from allies and a swiftly evolving security landscape in the Indo-Pacific region.
Shift Toward Long-Range Strike Capabilities
The budget emphasizes enhancing offensive capabilities, marking a shift from Japan's post-World War II restrictions. Over ¥970 billion is allocated for "standoff" weapons, including ¥177 billion dedicated to upgrading Type-12 surface-to-ship missiles to extend their range to about 1,000 km. These missiles are slated for deployment in Kumamoto prefecture in Japan's southwest by March, advancing the timeline by a year.
Japan's 2022 National Security Strategy identifies China as the primary strategic challenge, advocating for a proactive stance by the Japan Self-Defense Forces within the U.S.-Japan alliance.
Drones and Unmanned Systems to Offset Manpower Gaps
To counteract manpower shortages linked to an aging population, the budget assigns ¥100 billion to the "SHIELD" unmanned defence system, a network of drones for surveillance and defence to be operational by March 2028. Initial procurements are likely to be sourced from overseas, possibly from Turkey or Israel, to expedite deployment.
Rising Frictions With China
Tensions have escalated following Prime Minister Takaichi's remarks, indicating that Japan might intervene if China acts against Taiwan. Recent operations by a Chinese aircraft carrier near Japan's southwestern islands and incidents involving radar locks on Japanese aircraft have led to Tokyo filing protests. In response, Japan's Defence Ministry plans to establish a new office dedicated to analyzing Chinese military activities, capabilities, and developing countermeasures.
Industrial Base and International Collaboration
The budget also focuses on strengthening Japan's defence industry and exports. Over ¥160 billion is allocated for a next-generation fighter jet, co-developed with Britain and Italy, intended for deployment by 2035, along with AI-enabled "loyal wingman" drones. Additionally, nearly ¥10 billion is designated to support defence exports, buoyed by Mitsubishi Heavy Industries securing the contract for upgrading Australia's Mogami-class frigate.
What Comes Next
The defence budget must receive parliamentary approval by March as part of a ¥122.3 trillion national budget. If the five-year military enhancement proceeds as planned, Japan will emerge as the world's third-largest military spender, trailing only the United States and China. Funding for this initiative depends on increased corporate and tobacco taxes, with income tax hikes planned from 2027. However, sustaining spending beyond 2% of GDP continues to be a topic of discussion.
This move represents a significant adjustment in Japan's security strategy, emphasizing deterrence, preparedness, and technological superiority in an increasingly contested regional environment.
