Business & Economics
Japan Green-Lights ¥9 trn FY-2026 Defense Budget, Hitting 2 % GDP Target Two Years Early
On 26 Dec 2025, Prime Minister Sanae Takaichi’s cabinet approved a record ¥9+ trillion ($58 bn) defense allocation for FY-2026, accelerating Japan’s plan to double military spending to 2 % of GDP by March 2026 instead of 2028.
Focusing Facts
- The draft budget rises 9.4 % year-on-year to ¥9 trn and earmarks ¥970 bn for long-range “standoff” missiles, including ¥177 bn for 1,000 km-range Type-12 upgrades to be fielded in Kumamoto by March 2026.
- Another ¥100 bn is set aside for the SHIELD coastal-defense drone network, with initial imports likely from Türkiye or Israel and full deployment aimed for March 2028.
- Total national budget hits a record ¥122.3 trn, requiring ¥29.6 trn ($189 bn) in new bonds despite Takaichi’s public warnings against “irresponsible bond issuance.”
Context
Tokyo last broke its self-imposed 1 %-of-GDP ceiling in 2022, echoing the 1951-54 re-armament surge when post-occupation Japan created the Self-Defense Force under U.S. pressure during the Korean War. The new budget signals a structural shift: aging demographics shrink manpower while drones and long-range missiles substitute for boots, and the U.S.–Japan alliance’s asymmetric burden-sharing is recalibrated as Washington under Trump presses allies to pay more. Like West Germany’s 1980s Pershing II deployment, these forward-based strike assets aim to deter a geographically proximate rival (China) but risk spiralling arms races and domestic fiscal strain—Japan’s debt already exceeds 250 % of GDP. Whether this moment marks a permanent abandonment of post-1947 pacifism or a transient spike will shape Northeast Asian security architecture for decades; on a century scale it could redefine Japan from a “check-book ally” to an autonomous military actor, with economic sustainability as the critical unknown.
Perspectives
Financial and business press
Nikkei Asia, Economic Times — Highlight the record budget chiefly as a fiscal challenge, stressing Japan’s already "still high" debt, rising bond yields and the danger of “irresponsible bond issuance.” By centring debt markets and investor sentiment, their coverage can underplay the strategic drivers of the spending, reflecting a market-oriented preference for fiscal restraint over security arguments.
U.S. centre-left mainstream media
The Washington Post — Frames Tokyo’s rush to hit 2 % of GDP as an understandable reaction to China’s aggression and doubts about U.S. commitments under Donald Trump, depicting a dramatic but necessary shift in Japan’s security posture. The focus on Trump’s unpredictability and Chinese threats implicitly endorses higher military spending while giving scant attention to Japan’s pacifist constituencies or risks of regional escalation.
Right-leaning & defense-hawk outlets
Washington Times, Defence Blog — Praise the ¥9-trillion budget as a bold move to deter China, spotlighting new long-range missiles, drones and a break with post-war constraints as prudent steps to protect Japan and its allies. Their hawkish framing minimizes debate over an arms race, civilian costs or constitutional limits, mirroring a pro-military worldview aligned with defense-industry and conservative security priorities.