Japan is accelerating its military buildup under Prime Minister Sanae Takaichi, with a record defense budget for fiscal 2026 exceeding 9 trillion yen (approximately $58 billion). This marks a 9.4% increase from the previous year and positions Japan on track to become the world’s third-largest defense spender after the United States and China. Takaichi has advanced the target of reaching 2% of GDP in defense spending to March 2026—two years ahead of schedule—reflecting her hawkish stance on security.
Japan’s Record Defense Budget Under Takaichi in 2025-2026
The fiscal 2026 defense budget, approved in draft form in December 2025, includes significant allocations for advanced capabilities:
- Upgraded Type-12 surface-to-ship missiles with extended range.
- Unmanned drones for air, sea, and underwater operations under the “SHIELD” system.
- Joint development of next-generation fighter jets with international partners.
This forms part of a five-year plan to double defense spending to 2% of GDP, with Takaichi’s administration committing to hit this milestone early through supplementary budgets. The move represents a historic shift from Japan’s postwar pacifist constraints, enabling counterstrike capabilities and greater integration with allies.
Why Sanae Takaichi Advocates for Increased Defense Investment
Takaichi, a longtime security hawk, views robust defense as essential amid what officials describe as the “severest and most complex security environment in the postwar era.” Primary motivations include:
- Rising Threats from China → Japan faces escalating tensions, including Chinese military activities near its territories, radar incidents, and concerns over Taiwan. Takaichi has stated that Japan’s military could intervene in a Taiwan contingency, viewing it as an existential threat tied to national survival.
- North Korean and Russian Aggression → Ongoing missile developments and regional activities from North Korea and Russia heighten risks, prompting investments in missile defense and unmanned systems to address manpower shortages in an aging society.
- Strengthening the US-Japan Alliance → Under pressure from the United States to share more defense burdens, Takaichi has pledged enhancements to deterrence. Accelerating the 2% GDP target demonstrates commitment, especially amid discussions on alliance roles.
- Demographic and Technological Imperatives → Japan’s declining and aging population strains military recruitment, necessitating reliance on advanced technologies like drones and AI-operated systems.
- Broader Geopolitical Shifts → Global conflicts and changing warfare dynamics underscore the need for offensive capabilities and revised security strategies, with plans to update key documents by December 2026.
Takaichi frames defense as integral to national prosperity, arguing that security underpins economic stability.
Is Takaichi Pushing Back Japan’s Economic Superiority?
Critics question whether prioritizing defense diverts resources from economic revitalization, given Japan’s high public debt (nearly 240% of GDP) and challenges like stagnant wages, inflation, and a weak yen. Funding for the buildup involves tax hikes on corporations, tobacco, and eventually income, potentially straining households and businesses.
However, Takaichi rejects the notion of a trade-off, promoting a “responsible and proactive fiscal policy” that integrates defense with growth:
- She advocates aggressive fiscal spending to raise incomes, boost consumer confidence, and stimulate industries like AI and semiconductors.
- Defense investments are seen as economic drivers, fostering the domestic arms industry, joint international projects, and technology transfers that enhance overall innovation.
- Her approach echoes “military Keynesianism,” where defense spending creates jobs and demand, complementing broader stimulus packages.
Takaichi argues a strong economy requires security, and vice versa—positioning defense as a pillar of resilience rather than a burden. While fiscal sustainability remains a concern, with uncertain prospects for spending beyond 2% of GDP, her policies aim to balance both through strategic investments.
Japan’s Future
Takaichi’s defense push has drawn criticism from China, accusing Japan of deviating from peaceful development. Domestically, it enjoys support amid perceived threats, but long-term funding challenges persist. By accelerating military modernization, Takaichi seeks to position Japan as a more assertive player in regional security while maintaining economic vitality.
