Japan Approves Record 122 Trillion Yen Budget to Deter China

The Government of Japan approved a record-breaking 122.3 trillion yen (approximately $785 billion) budget for the fiscal year beginning April 2026. The plan prioritizes a record defense allocation exceeding 9 trillion yen, representing a 9.4% increase over 2025. This spending is part of a five-year program to raise annual military expenditure to 2% of GDP, a target accelerated by pressure from the United States.

Key military investments include 970 billion yen for standoff missile capabilities, with Type-12 surface-to-ship missiles slated for deployment in Kumamoto prefecture by March. The budget also allocates 100 billion yen for the SHIELD coastal defense system, which utilizes unmanned drones, and 160 billion yen for a next-generation fighter jet developed with Britain and Italy. Additionally, Japan plans to deploy mobile radar equipment in Okinawa by 2026 to monitor Chinese activities.

Prime Minister Sanae Takaichi defended the spending as a necessity for national strength, stating Japan could intervene if China takes military action against Taiwan. However, the aggressive spending has pushed 10-year government bond yields to a 27-year high of 2.1% amid concerns over public debt.

China strongly condemned the buildup. The Ministry of National Defense and Ministry of Foreign Affairs accused Japan of pursuing neo-militarism and deviating from a path of peaceful development. Chinese officials warned they would take resolute countermeasures against any provocations, characterizing the budget as a threat to regional stability.