Japan's Defense Budget Increase: A Strategic Shift in Response to Growing Regional Threats.

Japan recently announced another increase in its defense budget, continuing a trend seen over the past few years, reflecting a profound transformation in its security strategy. Traditionally characterized by a low-profile approach and defense policy based on pacifist principles, Japan now faces a deteriorating security environment. In response, the Japanese government has initiated a modernization and strengthening of its military capabilities, despite the accompanying economic and structural challenges.
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Soldiers from the Japan Ground Self Defense Force fire Type 12 Surface to Ship Missiles (SSM-12) as part of the RIMPAC 24 sinking exercise (SINKEX) on 12 July 2024 (Picture source: US DoD)

The country's defense budget has seen a significant rise, increasing from $9.2 billion in 2020 to a projected $18.6 billion in 2024, marking a compound annual growth rate (CAGR) of 19.3%, according to GlobalData's "Japan Defense Market 2024-2029" report. For 2024, the Ministry of Defense has requested a 17.2% increase, underscoring Japan's commitment to modernizing its armed forces in response to growing regional tensions. These expenditures are expected to reach 2% of Japan's GDP by 2027, aligning the country with NATO standards.

This budget increase focuses on several key initiatives. Japan has invested in modernizing its naval and aerial capabilities, acquiring Taigei-class submarines, Mogami-class frigates, and F-35A/B fighter jets. These investments aim to strengthen Japan’s deterrence and power projection in potential regional conflicts. Additionally, Japan is engaging in joint development projects, such as the Global Combat Air Programme (GCAP) in partnership with Italy and the United Kingdom. This initiative seeks to reduce development costs while reinforcing security ties, expanding Japan's cooperation beyond its traditional alliance with the United States.

A Japan Maritime Self-Defense Force (JMSDF) submarine and 12 ships from the Royal Australian Navy, Royal Canadian Navy, German Navy, Japan Maritime Self-Defense Force (JMSDF) and U.S (Picture source: US DoD)

Reasons for the Strategic Shift

Japan's security environment has significantly deteriorated in recent years. China, identified in Japan's National Security Strategy (NSS) as an "unprecedented strategic challenge," has increased its military presence in the region. Its near-constant patrols around the Senkaku Islands and missile tests within Japan’s exclusive economic zone have raised serious concerns. North Korea also poses a growing threat, particularly with its ballistic missile tests that frequently fly over Japanese territory. Additionally, Russia’s closer alignment with China and its aggression against Ukraine in 2022 have added to the increasingly uncertain security climate.

These factors have pushed Japan to rethink its defense strategy. Traditionally, Japan maintained a low profile on defense matters, avoiding explicit discussions about expanding its military power. This approach stemmed from its pacifist Constitution, adopted after World War II, which restricts the use of armed forces strictly to self-defense. However, the rising regional tensions and the heightened risk of conflicts have convinced the Japanese government to adopt a more proactive posture, enhancing its deterrence capabilities.

The war in Ukraine has also influenced Japanese public opinion, bolstering support for a significant defense effort. Japan’s growing military engagement aims to ensure the solidarity and support of its allies, particularly the United States, in the event of an attack.

Thus, Japan's defense modernization aligns with an integrated deterrence strategy that involves close cooperation with the United States while expanding partnerships with other key actors, such as Australia, India, and the United Kingdom, through alliances like AUKUS and the QUAD.

Japan has invested in modernizing its naval and aerial capabilities, acquiring Taigei-class submarines, Mogami-class frigates, and F-35A/B fighter jets (Picture source: Japan Air Self Defense Forces)

Challenges for Japan

Despite the increase in its defense budget, Japan faces several challenges. Financially, the rise in military spending comes amidst a difficult economic context. The yen is depreciating, and Japan's national debt has reached 260% of its GDP. Internal debates over funding these expenditures continue, as the government considers raising taxes on household income, corporations, and tobacco to support the defense effort. Such measures may prove unpopular and could lead to political uncertainties.

Legally, while Japan's pacifist Constitution no longer serves as a major barrier to the shift in defense strategy, the country still needs to establish clear legal frameworks to facilitate the transfer of defense technologies and equipment. Implementing an "active cyber defense" policy also requires laws that must be carefully drafted and adopted within Japan's often lengthy and complex legislative process.

Japan also faces human resource challenges. The Self-Defense Forces struggle to recruit enough qualified personnel to implement the new defense strategies, particularly in cybersecurity. While the Ministry of Defense is investing in drones and autonomous systems to offset the personnel shortage, the planned military build-up will still require the mobilization of trained experts and soldiers.

Finally, Japan's defense industry faces structural difficulties. Unlike the United States or China, Japan has few companies primarily focused on the defense sector. Budgetary constraints and the technological complexity of major military projects necessitate increased cooperation with international partners. However, the Japanese defense industry must overcome its lack of competitiveness in the global market. Japan's exclusion from the F-35 program illustrates the difficulties it encounters in establishing solid cooperation with its allies, mainly due to high osts and challenges in meeting international standards.

In conclusion, the increase in Japan’s defense budget reflects a significant strategic shift in response to an increasingly complex security environment. Despite economic, legislative, and industrial challenges, Japan is striving to modernize its capabilities and strengthen alliances to ensure its security and contribute to regional stability.