Japan's Record Defense Budget: A New Era of Military Spending

Japan is set to unveil a record-breaking defense budget for the 2025 fiscal year, with a staggering $732 billion allocated for military spending. This significant increase marks a departure from Japan's historical approach to defense spending and signals a new era of military investment. But what lies behind this dramatic shift, and how will Japan finance this massive buildup without compromising other public spending priorities?



Japan's new defense strategy, outlined in its National Security Strategy (NSS) and National Defense Strategy (NDS), aligns with its growing sense of vulnerability to security threats in its neighborhood. The country faces challenges from China's increasing influence, North Korea's unpredictable military activities, and Russia's aggressive behavior. To counter these threats, Japan aims to bolster its defense capabilities and adapt to a rapidly changing international balance of power.

The increased defense budget will prioritize several key military capabilities and technologies. Japan plans to enhance its standoff weapons capabilities, including the development of new satellite constellations for target detection and tracking, as well as the procurement of ship-launched and submarine-launched guided missiles. Additionally, the country will strengthen its integrated air defense and missile defense systems, space capabilities, and cybersecurity. The budget also includes funding for three new Mogami-class frigates and the construction of two Aegis System Equipped Vessels destroyers.



To finance this increased defense spending without compromising other public spending priorities, Japan plans to raise taxes and issue bonds. The government aims to increase the consumption tax from 10% to 11% in October 2023, and potentially to 12% in 2025. Additionally, Japan is expected to issue more government bonds, with the total issuance in FY2023 projected to reach ¥45.8 trillion, a 14.5% increase from the previous year.

As Japan unveils its record-breaking defense budget, it is clear that the country is committed to playing a more active role in regional security and protecting its national interests. The increased defense spending, coupled with strategic investments in key military capabilities and technologies, reflects Japan's determination to adapt to a rapidly changing security landscape. However, the public's support for this massive buildup remains to be seen, as concerns about tax hikes and other public spending priorities come into play.