Japan Approves Record ¥9 Trillion Defense Budget for 2026

Japan’s Cabinet on Friday approved a record-breaking defense budget exceeding 9 trillion yen ($58 billion) for the next fiscal year, signaling a major step in the country’s effort to strengthen its military capabilities amid rising regional tensions.

The draft budget for fiscal year 2026, starting in April, represents a 9.4% increase from 2025 and marks the fourth year of Japan’s five-year plan to double annual defense spending to 2% of gross domestic product (GDP). Once approved by parliament, the plan will place Japan among the world’s top military spenders.

Focus on Missiles and Coastal Defense

A major portion of the new spending is aimed at enhancing Japan’s so-called “strike-back” capability, a significant shift from its post-World War II policy that limited the use of force strictly to self-defense.

More than 970 billion yen ($6.2 billion) has been allocated to strengthen long-range or “standoff” missile capabilities. This includes 177 billion yen ($1.13 billion) for upgraded Type-12 surface-to-ship missiles, which will have a range of about 1,000 kilometers. The first batch of these missiles will be deployed in Kumamoto prefecture in southwestern Japan by March—a year ahead of schedule.

Japan’s southwestern islands, seen as strategically vulnerable, remain a key focus of the missile buildup.

Expanding Use of Drones

Facing an aging population and shortages in military personnel, the government is increasingly relying on unmanned systems. The budget earmarks 100 billion yen ($640 million) for the deployment of large numbers of unmanned aerial, surface and underwater drones to strengthen coastal surveillance and defense.

These systems will operate under a new framework known as “SHIELD,” scheduled for launch by March 2028. To speed up deployment, Japan plans to rely initially on imported systems, potentially from countries such as Turkey and Israel.

China Named Top Strategic Challenge

Japan’s current security strategy, adopted in 2022, identifies China as its most significant strategic challenge. Tensions have grown steadily, particularly over Taiwan and increased Chinese military activity near Japanese territory.

Prime Minister Sanae Takaichi said in November that Japan could become involved if China were to take action against Taiwan, comments that drew sharp reactions from Beijing.

Relations worsened this month after Chinese aircraft carriers conducted drills near southwestern Japan. Tokyo lodged protests after Chinese aircraft reportedly locked radar onto Japanese planes, a move considered a possible prelude to missile targeting.

In response, Japan’s Defense Ministry plans to open a new office dedicated to studying China’s expanding military operations across the Pacific.

Joint Weapons Development and Arms Industry Push

Japan is also strengthening its defense industry through international cooperation. The 2026 budget includes over 160 billion yen ($1 billion) for the joint development of a next-generation fighter jet with Britain and Italy, targeted for deployment in 2035. Research is also underway on AI-controlled drones designed to operate alongside the aircraft.

In a major boost for Japan’s defense manufacturers, Australia selected Mitsubishi Heavy Industries in August to upgrade its Mogami-class frigates, replacing its aging ANZAC-class fleet.

Nearly 10 billion yen ($64 million) has been allocated to support the defense industry and promote overseas arms sales, following Japan’s recent easing of export restrictions.

Funding and Political Challenges Ahead

The defense budget will form part of a 122.3 trillion yen ($784 billion) national budget bill that requires parliamentary approval by March. If implemented, Japan’s annual defense spending would rise to around 10 trillion yen, making it the third-largest in the world, after the United States and China.

While the government plans to fund the buildup through higher corporate and tobacco taxes, along with income tax increases from 2027, questions remain about the sustainability of future increases beyond the 2% GDP target.

Still, the latest budget underscores Japan’s determination to rapidly strengthen its military posture as security concerns in East Asia continue to mount.