Japan approves record defence budget as regional tensions intensify

TOKYO: Japan is making one of the biggest security decisions in its modern history.

On Friday, the Cabinet approved a record defence budget topping 9 trillion yen ($58 billion), a move that reflects how sharply the mood has shifted in Tokyo as tensions rise across East Asia. The increase is not just about numbers—it’s about a growing sense of urgency inside a country long defined by its postwar pacifism.

The proposed budget for fiscal 2026, starting in April, is nearly 10% higher than last year’s and is part of a five-year plan to double military spending to 2% of GDP. If lawmakers give their approval, Japan will be on track to become the world’s third-largest defence spender, behind only the United States and China.

Defence Minister Shinjiro Koizumi framed the decision in stark terms. Japan, he said, is facing “the severest and most complex security environment in the postwar era.” Even so, he stressed that the buildup does not mean abandoning the country’s peaceful values—an assurance clearly aimed at a public still uneasy about military expansion.

China, Taiwan, and a sense of pressure

Much of the anxiety driving the budget centres on China and the future of Taiwan. Prime Minister Sanae Takaichi raised eyebrows in November when she said Japan’s military could become involved if China moved against the island. Beijing responded angrily, and the comments underscored how closely Japan sees its own security tied to events across the Taiwan Strait.

At the same time, Washington has been urging Tokyo to play a bigger role in regional defence. In response, Takaichi’s government promised to hit the 2% spending target by March—two years earlier than originally planned—and to rewrite key security strategies by late 2026.

Missiles, drones, and defending remote islands

The new budget puts heavy emphasis on protecting Japan’s southwestern islands, which sit closest to potential flashpoints. Nearly 1 trillion yen is set aside for long-range missiles that can strike targets from a distance—a major shift for a nation that once limited itself strictly to defensive weapons.

Among them are upgraded Type-12 missiles, developed at home and capable of travelling about 1,000 kilometres. The first units will be deployed to Kumamoto Prefecture by March, a year earlier than planned, reflecting how fast Japan wants these systems in place.

Japan is also turning to unmanned technology. With a shrinking population and an overstretched military, officials see drones as essential. About 100 billion yen will go toward building a network of air, sea, and underwater drones—dubbed “SHIELD”—to monitor and defend coastal areas. To move quickly, Tokyo is considering buying some systems from overseas partners such as Turkey or Israel.

Close encounters at sea

The timing of the budget announcement is no accident. Recent Chinese aircraft carrier drills near southwestern Japan, including incidents in which Chinese aircraft reportedly locked radar onto Japanese planes, have heightened alarm in Tokyo. Such actions are widely viewed as a serious escalation.

Earlier this year, Japan also watched closely as two Chinese aircraft carriers operated near Iwo Jima at the same time—something never seen before. In response, the Defence Ministry plans to open a new office dedicated solely to studying China’s expanding military activity in the Pacific.

China, for its part, accuses Japan of drifting away from its postwar restraint. A Foreign Ministry spokesperson warned that Tokyo is moving “in a dangerous direction,” a charge that highlights just how strained relations have become.

Investing in industry and partnerships

Beyond weapons, Japan is using the budget to reshape its defence industry. More than 160 billion yen is earmarked for a joint project with Britain and Italy to develop a next-generation fighter jet by 2035, along with AI-powered drones designed to fly alongside it.

Japan is also cautiously stepping into the global arms market. After easing export restrictions, it scored a major win in August when Australia chose Mitsubishi Heavy Industries to help replace its ageing naval fleet. Nearly 10 billion yen in the budget is dedicated to supporting defence manufacturing and overseas sales.

Who pays—and what comes next

The defence expansion is part of a massive 122.3 trillion yen national budget that still needs parliamentary approval. Over five years, military spending would rise to around 10 trillion yen annually.

To pay for it, the government plans to raise corporate and tobacco taxes and introduce an income tax increase starting in 2027—measures that could test public support as costs of living remain a concern.

Still, the direction is unmistakable. As the regional security picture grows more uncertain, Japan is moving faster and further to strengthen its defences than at any time since World War II—reshaping not only its military, but its role in the world.