Japan Approves Record $58 Billion Defense Budget to Counter China with Missiles and Drones

Japan is unsheathing its military sword after decades of pacifism. The nation's cabinet on Friday, December 26, 2025, approved a record defense budget plan exceeding ¥9 trillion ($58 billion) for the 2026 fiscal year, a direct move to fortify its strike-back capability and coastal defenses with cruise missiles and unmanned arsenals as tensions with China escalate.

According to the Associated Press, the draft budget marks a 9.4% increase from 2025 and is the fourth installment of a five-year program to double annual arms spending to 2% of its gross domestic product. Prime Minister Sanae Takaichi's government has pledged to hit this target by March, two years ahead of schedule, partly due to U.S. pressure for a more robust military posture against regional threats.

A New Arsenal of Missiles and Drones

This budget signals a major break from Japan's post-World War II principle of limiting its military to self-defense. The 2022 security strategy explicitly named China as the country’s biggest strategic challenge. The new plan allocates over ¥970 billion ($6.2 billion) to bolster its "standoff" missile capabilities. This includes a ¥177 billion ($1.13 billion) purchase of upgraded, domestically developed Type-12 surface-to-ship missiles with a range of about 1,000 kilometers (620 miles). The first batch will be deployed to Kumamoto Prefecture by March, a year earlier than planned.

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To address its aging population and understaffed military, Tokyo is also betting on unmanned systems. The budget earmarks ¥100 billion ($640 million) for a surveillance and defense system called "SHIELD," which will deploy a massive fleet of air, sea-surface, and underwater drones by March 2028. Initially, Japan plans to rely on imports, possibly from Turkey or Israel, for speedier deployment.

Boosting the Defense Industry and Alliances

After easing its arms export restrictions in recent years, Japan is actively pushing to strengthen its domestic defense industry through international partnerships. The 2026 budget includes over ¥160 billion ($1 billion) for the joint development of a next-generation fighter jet with the UK and Italy, slated for deployment in 2035. In a significant boost for its industry, Australia selected Mitsubishi Heavy Industries in August to build its next fleet of frigates based on the Mogami-class design.