The draft budget for fiscal year 2026, which begins in April, represents a 9.4 percent increase from the current year and marks the fourth year of Japan's five-year program to double defense spending to about 2 percent of gross domestic product (GDP). The move reflects a dramatic shift for a country that for decades has limited its military posture under its post-World War II pacifist constitution.
The increase comes amid heightened concern in Tokyo over China's growing military assertiveness. Prime Minister Sanae Takaichi said in November that Japan's Self-Defense Force could become involved if China were to take military action against Taiwan, the self-governing island Beijing claims as its own.
The defense budget plan still requires parliamentary approval by March as part of a broader 122.3 trillion yen ($784 billion) national budget package. If enacted, Japan's five-year military buildup would lift annual defense spending to around 10 trillion yen ($64 billion), making Japan the world's third-largest military spender after the United States and China.
Under pressure from the United States to shoulder more of the regional security burden, Takaichi's government has pledged to meet the 2 percent of GDP defense target by March, two years earlier than originally planned. Japan also plans to revise its national security and defense policies by December 2026 to further expand its military capabilities.
A key focus of the new budget is strengthening Japan's ability to strike enemy targets from a distance, a significant departure from its long-standing principle of limiting the use of force strictly to self-defense. Japan's current security strategy, adopted in 2022, identifies China as the country's greatest strategic challenge and calls for a more proactive role for the Self-Defense Force under Japan's alliance with the United States.
Newsweek has reached out to the U.S. State Department via email on Thursday night for comment.
More than 970 billion yen ($6.2 billion) in the proposed budget is earmarked for enhancing Japan's "standoff" missile capabilities. That includes a 177 billion-yen ($1.13 billion) purchase of domestically developed and upgraded Type-12 surface-to-ship missiles, which have an estimated range of about 1,000 kilometers (620 miles).
The first batch of Type-12 missiles is scheduled to be deployed by March in Kumamoto prefecture on Japan's southwestern island of Kyushu, a year earlier than initially planned, as Tokyo accelerates efforts to bolster defenses near strategic island chains.
Japan is also investing heavily in unmanned weapons systems, driven in part by the country's aging and shrinking population and chronic shortages of military personnel. The government has increasingly viewed drones as essential to maintaining defensive readiness.
To strengthen coastal defenses, the budget allocates 100 billion yen ($640 million) to deploy large numbers of unmanned aerial, surface and underwater vehicles for surveillance and defense under a system known as "SHIELD," which defense officials say is scheduled to be operational by March 2028. To speed deployment, Japan initially plans to rely on imported systems, potentially from Turkey or Israel.
The budget decision comes as relations between Japan and China have grown increasingly strained. Tensions escalated this month after Chinese aircraft carriers conducted drills near southwestern Japan, prompting protests from Tokyo after Chinese aircraft locked radar on Japanese planes -- a move widely viewed as a possible precursor to missile targeting.
After Takaichi's November remarks, China responded with a sustained public relations campaign portraying Japan as a revanchist power -- citing the country's recent increases in defense spending and plans to deploy missiles on a remote island near Taiwan. Tokyo's Defense Ministry this year described China's military buildup and expansive moves in the region as Japan's greatest security challenge.
Japan's Defense Ministry, already alarmed by China's expanding military activity in the Pacific, plans to open a new office dedicated to studying operations, equipment and strategies to counter Beijing's regional presence. In June, two Chinese aircraft carriers were spotted operating simultaneously near the southern Japanese island of Iwo Jima for the first time, deepening concerns about China's growing reach beyond the East China Sea.
Alongside boosting military capability, Japan is seeking to strengthen its defense industry through joint development projects with allied nations and by promoting arms exports, following a major easing of export restrictions in recent years.
For fiscal year 2026, Japan plans to spend more than 160 billion yen ($1 billion) to jointly develop a next-generation fighter jet with Britain and Italy, with deployment targeted for 2035. The project also includes research into artificial intelligence-controlled drones designed to operate alongside the aircraft.
Japan's defense industry received a further boost in August when Australia selected Mitsubishi Heavy Industries to upgrade its Mogami-class frigate design to replace Australia's aging ANZAC-class fleet. The budget includes nearly 10 billion yen ($64 million) to support industrial capacity and overseas arms sales.
Minoru Kihara, Japan's chief cabinet secretary, told reporters last week that Japan was "upholding the three nonnuclear principles" and would "continue advancing its efforts toward realizing a world without nuclear weapons."
A U.S. State Department spokesperson told The Japan Times on Saturday: "Japan is a global leader and a valuable partner to the United States on nuclear nonproliferation and advancing nuclear arms control. As the National Security Strategy makes clear, the United States will maintain the world's most robust, credible, and modern nuclear deterrent to protect America and our allies, including Japan."
Guo Jiakun, China's Foreign Ministry spokesman, recently warned that Japan has "for a long time" been stockpiling plutonium in amounts exceeding its civilian energy needs, and noted that the country possesses the technological capability to develop nuclear weapons "in short order" if it chose to do so. "If Japan dares to pitch itself against the rest of the world, we will never allow it to test the bottom line and international justice," he said.
To fund the expansion, Takaichi's government plans to raise corporate and tobacco taxes and has approved income tax increases starting in 2027. While officials say Japan will meet its 2 percent target as promised, prospects for sustaining higher defense spending beyond that level remain uncertain.