The Japanese government approved a record budget for the next fiscal year on December 26, funding increasing defense spending and social security expenditures.

According to an analysis by Associated Press, amid rising regional tensions, Japan is deploying plans including cruise missiles and unmanned weapon systems to strengthen its counterattack capabilities and coastal defenses, aiming to deter China.

The total annual budget amount reaches 122.3 trillion yen (78.4 billion US dollars), covering the fiscal year starting April 1, 2026, exceeding the current fiscal year's application of 115 trillion yen. According to reports from the Nikkei Shimbun and Mainichi Shimbun, this is the first budget compiled under the government of Sanae Takeda, with a clear expansionary fiscal policy. On Thursday, Japanese Prime Minister Sanae Takeda tried to ease market concerns about her expansionary fiscal policy, stating that the government's budget draft maintains fiscal discipline by limiting reliance on debt.

The government plans to present the budget bill at the regular session of the Diet in January next year, aiming to pass it by the end of March.

Continuing to Increase Defense Spending

Notably, the defense budget also set a record, reaching 2% of the GDP. Kyodo News pointed out that the Japanese government decided on the 26th to set the defense budget for the 2026 fiscal year at a record high of 9 trillion yen, exceeding the original budget of 8 trillion yen for the 2025 fiscal year, continuing the growth trend. The Japanese government had set the defense budget required to thoroughly enhance defense capabilities over five years from 2023 to 2027 at approximately 43 trillion yen. The 2026 fiscal year budget is the fourth year of this five-year plan, showing a yearly increase. This five-year defense construction plan will bring Japan's annual defense spending to about 10 trillion yen (about 64 billion US dollars), making it the third largest defense spender in the world after the United States and China. The Japanese Ministry of Finance stated that Japan will complete the 2% defense spending target as promised before March.

The latest defense budget includes 177 billion yen (1.13 billion US dollars) to purchase domestically developed and upgraded Type 12 surface-to-ship missiles, with a range of about 1,000 kilometers. The first batch of Type 12 missiles will be deployed in Kumamoto Prefecture in the southwest of Japan in March, one year earlier than planned, as Japan accelerates missile construction in the region. Given the acceleration of drone procurement by countries following the outbreak of the Ukraine conflict, which has changed the nature of warfare, the Japanese government will focus its budget on this area. A core project involves building a coastal defense system called "SHIELD" using a large number of attack drones, for which 101 billion yen is allocated.

According to Kyodo News, the purchased drones are expected to be mainly used for reconnaissance and attacking enemy ships. An additional 2.2 billion yen is allocated for verification tests on managing and operating multiple drones simultaneously. Considering China, 1.1 billion yen is allocated to verify long-duration drone operation plans as a measure against airspace violations. To strengthen the defense system in the southwest, the Ground Self-Defense Force's 15th Infantry Brigade based in Naha will be upgraded to a division. To respond to China's maritime activities, a new "Pacific Defense Concept Office" will be established to study the defense system in the Pacific region. To ensure crisis management, the number of vice ministers of defense will be increased from one to two.

Considering the growing importance of space operations, the Air Self-Defense Force will be reorganized into the "Air and Space Self-Defense Force." An allocation of 1.1 billion yen will be used to purchase equipment that monitors the status of artificial satellites being interfered with.

Targeting China

According to AFP, Japanese Prime Minister Sanae Takeda wants to accelerate Japan's military modernization amid deteriorating relations with China. The Japanese Ministry of Defense stated in an introduction document that "Japan is facing the most severe and complex security environment since the end of World War II," emphasizing the need to "fundamentally strengthen" its defense capabilities.

According to an analysis by Associated Press, the record defense budget plan comes at a time when Japan is facing increasingly tense relations with China, targeting China.

At the same time, under pressure from the United States to increase military spending, the Takeda administration has committed to achieving the 2% military spending target by March, two years ahead of schedule. Japan also plans to revise its current security and defense policies by December 2026 to further strengthen its military power.

In response to Japan's plan to significantly increase defense spending again, Chinese Foreign Ministry spokesperson Lin Jian said on Friday that this more clearly reveals the sinister intentions of right-wing forces in Japan to push for Japan's "militarization" and attempt to revive militarism.

Worsening Japan's Public Debt

As part of the 122.3 trillion yen national budget; this defense budget plan requires approval by the Diet in March to be implemented. The Takeda administration plans to fund its growing military expenses by increasing corporate taxes and tobacco taxes, and recently passed a plan to raise income taxes starting in 2027. However, it remains unclear whether future economic growth can achieve a higher proportion of GDP.

According to AFP analysis, the market is concerned that the Takeda administration's massive spending may worsen Japan's public debt. According to International Monetary Fund (IMF) projections, Japan's public debt as a percentage of GDP is expected to exceed 232% by 2025.

At the beginning of December, the Japanese Diet approved a large supplementary budget to fund an economic stimulus plan exceeding 100 billion euros, leading to a depreciation of the yen and a surge in Japanese government bond yields.

Takeda argued that this massive public expenditure aims to stimulate economic growth. On Tuesday, Takeda reiterated her commitment to the country's financial health in an interview with the Nikkei Shimbun and rejected any "irresponsible bond issuance or tax cuts."

Yasuharu Kiriya, an economist at Nomura Research Institute, said the current budget size should not surprise the bond market.

Another challenge Japan faces is an aging population, mainly due to a long-term low birth rate and cautious immigration policies. The budget draft still needs approval from the parliament.

Sources: rfi

Original: toutiao.com/article/7588349378495021606/

Statement: This article represents the views of the author alone.