The Japanese government officially approved the draft budget for the fiscal year 2026 in a cabinet meeting on Friday, December 26. The defense-related expenditures in the budget exceeded 9 trillion yen (approximately 580 billion USD), representing a 9.4% increase from the previous year and reaching a historic high. Officials emphasized that this move is aimed at addressing the rapidly deteriorating security environment, particularly the increased military pressure from the Chinese Communist Party.
In late 2022, Japan formulated a five-year Defense Capability Buildup Plan (fiscal years 2023-2027), which clearly stated the goal of raising defense-related expenditure to around 2% of the country’s gross domestic product (GDP) by around fiscal year 2027.
Against the backdrop of the United States urging allies to shoulder more defense responsibilities, the administration of Prime Minister Takanashi promised to achieve this percentage ahead of schedule in the fiscal year 2025 and planned to revise national security and defense-related policies by the end of 2026, thereby strengthening Japan’s role in regional security.
In the budget for fiscal year 2026, the proportion allocated to long-range strike capabilities saw a significant increase. Japan will invest over 970 billion yen to enhance its “long-distance strike capability,” including allocating 177 billion yen to upgrade the domestically produced Type 12 anti-ship missiles, extending their range to approximately 1000 kilometers. The first batch of upgraded missiles is expected to be deployed in Kumamoto Prefecture, Kyushu, in March next year, seen as part of defense preparations for the southwestern islands.
Facing shortages in Self-Defense Force personnel and pressures from an aging population, Japan is significantly expanding its investment in unmanned equipment. The Ministry of Defense will allocate around 100 billion yen to establish the comprehensive unmanned defense system “SHIELD,” integrating unmanned aerial, surface, and underwater vehicles for coastal surveillance, anti-submarine operations, maritime protection, and is expected to achieve operational capability by March 2028.
To expedite deployment, Japanese officials revealed that initial procurements may prioritize countries like Turkey and Israel that already possess mature systems.
The budget preparation comes amid continued tension in military interactions between Japan and China. Prime Minister Takanashi publicly stated in November that if the Chinese Communist Party were to take military action against Taiwan, Japan might be forced to intervene, sparking strong criticism from Beijing.
In December, during large-scale exercises of the Chinese aircraft carrier fleet in the southwestern sea areas of Japan, Japanese Self-Defense Force fighter jets were illuminated by Chinese radars, leading Tokyo to issue stern protests to Beijing, deeming China’s actions provocative. In June this year, the simultaneous appearances of two Chinese aircraft carriers in the vicinity of the Senkaku Islands were also viewed by Japan as strategic signals.
The Ministry of Defense has decided to establish a dedicated department to monitor and study Chinese military activities and weapon deployments in the Western Pacific, serving as a crucial basis for future defense planning and readiness enhancements.
In addition to strengthening its own military capabilities, Japan is focusing on rebuilding its military-industrial capacity. With over 160 billion yen allocated in the budget, Japan is collaborating with the UK and Italy on developing a new generation of fighter jets, aiming for deployment by 2035, along with the simultaneous development of AI unmanned drones for cooperative operations with the fighter jets.
Furthermore, Australia designated Mitsubishi Heavy Industries as the prime contractor for its naval fleet upgrade program in August this year, representing a significant breakthrough for Japan’s defense industry in the international market.
Overall, the total budget for the general account in fiscal year 2026 will amount to a staggering 122.3 trillion yen (approximately 7,830 billion USD). Driven by rising prices and increased structural expenditures, it marks a consecutive second year of setting a new record high, surpassing the 115.2 trillion yen of the previous year.
Apart from the record-breaking defense budget of 9.04 trillion yen, social security expenses remain the largest item, reaching 39.06 trillion yen; infrastructure budget stands at 6.11 trillion yen, focusing on the renovation of aging water and sewage systems; and the agriculture, forestry, and fisheries sector has been allocated 2.30 trillion yen to stabilize the supply of rice affected by price hikes.
While the government estimates that tax revenue for the fiscal year 2026 will reach a new high of 83.74 trillion yen, it is still insufficient to cover the overall expenses, necessitating an additional issuance of 29.58 trillion yen in national debt to fill the gap, further increasing the debt burden.
Introduced as the first full annual budget under the Takanashi administration, this budget incorporates some of the tax adjustment requests from opposition parties, aimed at ensuring smooth passage in the parliament.
The Japanese fiscal year begins on April 1, and the budget proposal is expected to be submitted for parliamentary deliberation within this fiscal year, usually receiving approval by the end of March. In the event of delays in the deliberation process, the government may resort to temporary budgets to maintain administrative operations.
（This article references reports from The Associated Press and Japan Broadcasting Corporation）