Japan Sets Record Defence Budget to Counter China Threat

Japan’s Cabinet on Friday approved a record defence budget exceeding 9 trillion yen (approximately USD 58 billion) for the next fiscal year, underscoring Tokyo’s determination to strengthen its military deterrence. The draft budget for fiscal year 2026, beginning in April, represents a 9.4 per cent increase from 2025 and marks the fourth year of Japan’s five-year plan to double defence spending to 2 per cent of GDP.

The budget prioritizes enhancing Japan’s “strike-back” and coastal defence capabilities through long-range cruise missiles and unmanned systems. More than 970 billion yen has been earmarked for standoff missile capabilities, including the purchase of upgraded domestically developed Type-12 surface-to-ship missiles with a range of around 1,000 kilometres. Deployment of these missiles in southwestern Japan has been accelerated amid growing regional concerns.

Japan is also investing heavily in unmanned weapons systems to offset challenges posed by its aging population and military recruitment shortages. Around 100 billion yen will be spent on air, surface, and underwater drones for surveillance and coastal defence under the “SHIELD” system, scheduled for deployment by 2028. Initial procurement is expected to rely largely on imports from partner countries.

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The defence buildup comes against the backdrop of escalating tensions with China, particularly over Taiwan. Prime Minister Sanae Takaichi has warned that Japan could become militarily involved if China takes action against the self-governing island. Recent Chinese aircraft carrier drills and radar-lock incidents near Japan’s southwestern islands have further heightened Tokyo’s security concerns.

Japan’s updated security strategy, adopted in 2022, identifies China as its greatest strategic challenge and supports a more proactive role for the Self-Defence Forces under the U.S.-Japan alliance. To address China’s expanding Pacific operations, the Defence Ministry plans to establish a new office focused on monitoring and countering Beijing’s military activities in the region.

Beyond immediate defence needs, Japan is also strengthening its defence industry through international collaboration. The 2026 budget includes over 160 billion yen for joint development of a next-generation fighter jet with Britain and Italy, alongside research into AI-operated drones. While Japan is on track to meet its 2 per cent GDP defence target by March, questions remain over long-term funding as the government plans tax increases to sustain rising military expenditure.

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