Japan’s Defence Budget Surge: A New Security Paradigm

Japan’s decision to increase defence spending to 2% of GDP by 2027 represents a pivotal moment in its post-Cold War security strategy. While the two-percent figure is largely symbolic taking into account currency fluctuations, it nevertheless demonstrates Tokyo’s determination to respond to regional and global security challenges. This transformation is not merely reactive but marks a broader strategic recalibration. Central to this is the heightened recognition of the interconnectedness between Euro-Atlantic and Indo-Pacific security, as demonstrated by the ramifications of the Russian invasion of Ukraine.

In particular, the Russo-Ukrainian war has underscored the failure of deterrence in Europe, prompting Japan to adopt measures to strengthen its own security posture. This includes acquiring counterstrike capabilities, revising arms export policies, and enhancing its defence industrial base. This commentary explores how Japan’s defence budget increase aligns with evolving strategic realities, while also addressing domestic and international implications.

Revised Budget Framework: A Strategic Leap

Building on the late Shinzo Abe's initiative to modernise the Japan Self-Defense Forces (JSDF), the latest defence budget represents a historic commitment to enhancing Japan's military capabilities. Japan is on track to allocate 1.6% of its GDP to defence in FY2024, with plans to reach 2% by 2027 – an unprecedented level in its post-war history, breaking the traditional ‘1% of GDP’ rule. The FY2024 budget, including related expenditures, is approximately ¥9.36 trillion. For FY2025, the budget request stands at ¥8.73 trillion, reflecting Japan's sustained commitment to achieving its defence goals.

The transition from a strictly defensive military posture to one actively deterring and intercepting threats is supported by investments in cutting-edge capabilities. Key allocations in the FY2025 budget request include:

• ¥970.0 billion – Stand-Off Defence Capabilities: Japan is prioritising long-range precision weapons like the Tomahawk missile, which boasts a range of 1,600 km (1,000 miles), and the Mitsubishi Heavy Industries' upgraded Type-12 surface-to-ship missile, with an extended range of 1,000 km (621 miles). These systems signify the establishment of counterstrike capabilities aimed at addressing threats from China and North Korea.
   
• ¥537.3 billion – Integrated Air and Missile Defence: Japan is expanding its air and missile defence networks to address hypersonic and ballistic missile threats. This includes upgraded radar systems, advanced interceptor missiles, and enhanced joint operations with US forces.
   
• ¥491.0 billion – Cyber and Space Domains (combined from Space [¥226.5 billion] and Cyber [¥264.5 billion]): Investments target emerging multi-domain threats across cyber, space and electromagnetic spectrum operations. Key projects include deploying satellite constellations for situational awareness, tracking capabilities, and integrating these with counterstrike defences.
   
• ¥407.1 billion – Command and Control and Intelligence Functions: Enhancing command, control and intelligence infrastructure will boost operational autonomy and joint operations, critical for executing complex missions in the Indo-Pacific region.
   
• ¥103.2 billion – Unmanned Asset Defence Capabilities: The modernisation programme includes phasing out outdated observation helicopters and investing in drones and unmanned systems. These changes aim to enhance responsiveness while reducing operational costs.
   
• ¥447.6 billion – Maneuvering Deployment and Civil Protection: This budget strengthens Japan's capacity to project power and protect civilian infrastructure.
   
• ¥2,952.2 billion – Sustainability and Resiliency (combined from Ammunition and Missiles [¥344.0 billion], Equipment Maintenance [¥1,751.1 billion], and Facility Reinforcement [¥857.1 billion]): Ensuring adequate stockpiles of ammunition and critical supplies, as well as fortifying operational bases, is central to Japan's ability to sustain prolonged engagements.

Japan’s focus on acquiring counterstrike capabilities aligns with its evolving role in the US–Japan alliance. Historically viewed as the ‘shield’ in the alliance, Japan’s adoption of offensive capabilities presents a more proactive stance, potentially reshaping the regional security architecture. However, as recent analyses suggest, these capabilities – while important – must be part of a broader strategy that includes resilience in infrastructure and readiness for sustained conflict. Hence, the integration of counterstrike measures must address key vulnerabilities including missile defence gaps, logistical readiness, and civil protections. This shortfall necessitates the development of medium-range surface-to-air systems and upgrades to critical infrastructure, which will need to effectively deter adversaries without escalating tensions unnecessarily.

Regional and Global Implications

In terms of building regional deterrence, China’s frequent incursions near the Senkaku Islands in the East China Sea have pushed Japan to bolster its maritime and aerial defence capabilities, including deploying high-precision systems to counter naval threats. The missile defence strategy focusing on interception is intended to counter China and North Korea’s growing missile arsenals. Supporting these initiatives has been an expansion of Japan’s Maritime Domain Awareness via land, sea and space-based monitoring systems to enhance tactical responsiveness. In short, Japan is augmenting the range of its security umbrella.

Turning to the impact on alliances, Japan’s budget aligns with NATO’s 2% benchmark, signalling its commitment to shared global security norms in the face of geopolitical polarisation. Washington’s traditional hub-and-spoke framework is evolving, and these investments show a deepening of joint training and integrated defence measures. Certainly, Japan’s willingness to accept more burden-sharing will be welcomed by the incoming US president. By the same token, 2% may only meet the minimum requirement demanded of the new Japanese government by the Trump administration based on the real costs of Japan’s expanded security role. So, further upward revisions may be on the cards.

New Leadership

Having served as defence minister and director general of Japan’s Defence Agency, recently elected Japanese Prime Minister Shigeru Ishiba is known as a ‘military otaku ’, with firm views on strengthening Japan’s defence footing in light of the ‘new era of crisis’ . Ishiba called airspace incursions by China and Russia this year ‘totally unacceptable’ and ‘serious violations’ [Editor1] , showing his resolve to strengthen Japan’s ability to defend itself and deter others. This tough rhetoric is indicative of Japan dealing with an increasingly complex security environment on its own terms. Yet Ishiba is just as likely to expend as much political capital on shoring up his own leadership as on transforming Japan into a formidable fighting force.

Domestic Concerns

These changes to Japan’s security outlook face serious challenges. Funding the defence surge via bonds and tax increases remains highly contentious, especially in light of Japan’s aging population and economic pressures. Furthermore, Japan’s pacifist constitution continues to provoke debate, with critics arguing that counterstrike capabilities defy the principles of Article 9. Public support for the new measures increasingly hinges on the government’s ability to communicate their absolute necessity convincingly.

In the context of exports, Japan’s shift from a very restrictive policy to active promotion of arms production and sales reflects its broader strategic objectives. The export of defence equipment, such as the sale of radar systems to the Philippines [Editor2] , underscores Japan’s commitment to regional stability. However, Japan’s defence industrial base still faces significant hurdles. Companies remain reluctant to invest in export-oriented production due to low profit margins and high entry barriers. Addressing this will require sustained government backing, including subsidies and the establishment of export-specific manufacturing facilities.

Security Gaps

Even with the added capabilities, significant gaps remain in the JSDF’s arsenal. With the cancellation of the Aegis onshore missile defence system , Japan’s skies remain relatively open to threats; thus, a far more comprehensive air defence system would be crucial if the situation deteriorates. In addition, investment in dual-use technologies is a critical area in which Japan lags behind other advanced countries. Areas in need of investment include cutting-edge chips and sensors for drones and cyber tools, as these are fundamentally altering the face of modern warfare. While Japan’s manufacturing base is closing the gap in conventional systems, the country is still reliant on the US and other allies for more advanced platforms and their all-important support in providing training in doctrine for operational readiness.

Furthermore, as the age of cheap, disposable and confounding technologies has arrived, conventional weapons systems alone are no longer enough. Despite the evidence on show in Eastern Europe and the Middle East, recognition of this fundamental sea change in security technology is not yet widespread within Japanese security circles. The lack of urgency regarding the need to proactively comprehend and respond to the efficacy of disruptive technologies is a hindrance to achieving greater self-sufficiency. Japan’s tech industry should be able fill this technical gap with its advanced capacities, but it has historically been reluctant to risk getting entangled in national security. Recruitment is a further area of concern, as attracting and retaining personnel to actually man the JSDF has proven difficult. Therefore, there needs to be a programme of ongoing budgetary stipulations devoted to salaries and retention bonuses in order for the JSDF to attract employees.

Summary

Japan’s budget surge positions it to address three critical objectives:

1. Enhanced Deterrence: Strengthening capabilities to respond to immediate regional threats. This requires a mix of conventional and disruptive systems.
    
2. Global Alignment: Solidifying its role as a proactive security partner in Asia by continuing to uphold the rules-based-order via the Free and Open Indo-Pacific initiative and alliance operations.
    
3. Technological Leadership: Investing in AI, dual-use technologies and cyber to maintain a competitive edge, utilising the tech sector to fill the security technology gap.

To achieve these objectives politically, Japan must:

• Clearly communicate the necessity of defence reforms to its citizens.
• Balance fiscal measures to avoid undermining economic growth.
• Engage diplomatically to mitigate regional tensions arising from its new security posture.

Conclusion

Japan’s defence budget surge is not an isolated policy but part of a larger vision to enhance its deterrence, deepen alliances, and contribute to global security. To achieve these goals, on top of the current plans, Tokyo must address gaps in its military capabilities, foster greater collaboration with the private sector, and navigate domestic scepticism. The coming years will determine whether Japan can balance the growing need for assertiveness with its established diplomacy to cement its place as a stabilising force in the Indo-Pacific.

© Daisuke Kawai, 2024, published by RUSI with permission of the author

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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