Japan’s government has taken a major step in reshaping its national security posture, approving a historic defence budget exceeding ¥9 trillion (about $58 billion) for fiscal 2026, a new high that reflects deepening anxieties over China’s military activities and shifting regional geopolitics. The decision, made by Prime Minister Sanae Takaichi’s Cabinet, is part of a broader effort to strengthen Japan’s military capabilities while accelerating a multi-year plan to raise defence spending to 2 per cent of gross domestic product.
Unprecedented Defence Spending in a Volatile Region
The Cabinet’s approval of Japan’s largest ever defence budget marks a 9.4 per cent increase compared with the current year’s allocation and is the fourth consecutive annual rise under a five-year defence build-up programme aimed at meeting a 2 per cent GDP target.
The draft budget, which now heads to the Diet for final approval, is structured to expand Japan’s strike capabilities, coastal defences and advanced military technologies. Among the priorities are cruise missiles, new long-range surface-to-ship missiles, and a significant expansion of unmanned systems across air, sea and underwater domains. A ¥100 billion “SHIELD” layered defence system of drones is planned for deployment by 2028.
Government officials have framed the spending increase as a necessary response to Japan’s most severe security environment in the post-World War II era, driven by escalating strategic competition and military modernisation in East Asia.
Strategic Aims: Deterrence and Self-Defence
Japan’s defence strategy has shifted significantly over recent years, with the current budget reflecting a more assertive stance on security:
- Strike-back and long-range capabilities: Nearly ¥970 billion is being allocated to enhance “standoff” missiles, including upgraded Type-12 surface-to-ship systems with ranges of about 1,000 km — a major expansion of Japan’s ability to strike potential threats before they reach Japanese territory.
- Unmanned systems and modern technologies: The emphasis on drones and autonomous systems aims to compensate for Japan’s demographic challenges and manpower shortages within the Japan Self-Defence Forces.
- Joint development and industrial revitalisation: Tokyo plans to invest in collaborative projects such as a next-generation fighter jet with European partners and support its domestic defence industrial base.
Analysts see these investments as part of Japan’s broader move away from strictly defensive postures toward capabilities that could deter aggression and, if necessary, respond effectively in a conflict scenario.
China Tensions at the Core of the Budget Debate
Japan’s expanded defence spending is widely understood as a response to growing tensions with China, particularly over security concerns in the East China Sea and the Taiwan Strait. The budget approval comes against a backdrop of increasingly assertive Chinese military activity — including naval drills and aerial operations near Japanese airspace — and sharp diplomatic friction following comments by Prime Minister Takaichi. In November, she suggested that Japan’s military might become involved if China took action against Taiwan, a position that triggered strong rebukes from Beijing.
Chinese officials have accused Japan of fuelling regional arms races, especially with its investment in space-based and unmanned defence technologies. Tokyo, for its part, maintains that its defence enhancements are defensive and designed to protect national sovereignty and regional stability.
Japan’s current national security strategy, adopted in 2022, explicitly identifies China as its biggest strategic challenge and calls for a more proactive role for the Self-Defence Forces in collaboration with allies such as the United States.
Financial, Political and Economic Implications
The defence budget proposal is part of a broader ¥122.3 trillion national fiscal blueprint for FY 2026, which also seeks to balance economic growth with rising security demands. Tokyo has indicated that it will fund the expanded defence programme through measures including modest tax increases on corporations, tobacco and personal income starting in 2027.
Public opinion on defence spending and security policy in Japan is mixed. While many citizens support stronger deterrence amid regional threats, critics argue that heavier military expenditure may erode Japan’s post-war pacifist legacy and risk escalating tensions.
Politically, the defence budget is likely to be a focal point of debate in the Diet, where ruling parties must secure parliamentary approval by March for it to take effect. Deliberations will also examine how the measures fit within Japan’s constitutional limits on the use of force and its self-defence doctrine.
Alliances and Regional Security Dynamics
Japan’s military transformation is closely tied to its security alliance with the United States, which has been encouraging Tokyo to meet NATO-style defence spending benchmarks. Prime Minister Takaichi has accelerated efforts to reach the 2 per cent target two years ahead of schedule, reflecting both U.S. pressure and Tokyo’s own strategic imperatives.
Japan is also strengthening defence industry cooperation with other partners. Significant investments are planned for joint projects with the United Kingdom and Italy, and defence contracts such as Australia’s selection of Japanese firms to upgrade naval frigates reflect expanding regional collaboration.
Analysts caution that as Japan deepens its military capabilities, the region may experience heightened security dilemmas, particularly if Beijing interprets Tokyo’s moves as part of a broader containment strategy. Balancing deterrence with diplomacy will remain a key policy challenge.
Looking Ahead: Implementation and Policy Revision
With the defence budget now approved by the Cabinet, the next phase involves legislative scrutiny and implementation planning. Defence officials are preparing for procurement timelines that could bring some systems, such as new missiles and drones, into deployment earlier than initially envisaged.
Additionally, Takaichi’s government has signalled plans to revise Japan’s security and defence policies by December 2026, further aligning them with the new budget’s strategic priorities and the evolving threat environment.
Conclusion: Japan’s Strategic Shift Deepens
Japan’s Cabinet approval of a record defence budget amid escalating tensions with China represents a significant shift in Tokyo’s security posture, blending traditional self-defence imperatives with emerging deterrence strategies. As the budget proceeds through parliament and implementation phases begin, Japan’s role in regional security — alongside allies and in response to China’s rise — is set to become even more central to East Asian geopolitics.
