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Japan's defense spending on brink of breaking 1% GDP cap

Tokyo to build up defenses against Chinese threat in East China Sea

Purchases of fighter jets, including the F-35A, are expected to comprise a large portion of the Japanese Defense Ministry's budget request. (Photo courtesy of Japan Air Self-Defense Force)

TOKYO -- Japan's Defense Ministry will seek a fiscal 2022 budget of more than 5.4 trillion yen ($49.3 billion), a record amount that could surpass the long-standing cap of 1% of gross domestic product.

Japan has already signaled that it may not stick with the 1% GDP cap as it bolsters defenses against the growing Chinese threat in the region.

The amount is expected to be on par with the fiscal 2021 request of 5.49 trillion yen, as Finance Ministry rules limit sharp increases in spending. The actual budget approved late last year was somewhat lower, at 5.34 trillion yen.

The increase in spending aims to beef up the Japan-U. S. alliance's deterrence capabilities against China. Beijing's defense budget has more than doubled over the past decade, and the country's fleets of modern submarines and fighter jets are already larger than Japan's.

Tokyo is focused on bolstering its own defenses in the southwestern Nansei Islands, which include Okinawa. The Japan-administered Senkaku Islands are situated close to Taiwan and could be caught up in a hypothetical U.S.-China conflict there.

The request would come in at around 0.95% to 0.97% of the fiscal 2022 GDP estimate released in July by the Cabinet Office, but the final tally could clock in above the asked-for amount. The fiscal 2021 defense budget drafted last December tacked on about 200 billion yen for expenses not included in the request, such as certain costs related to the relocation of U.S. forces.

And GDP could undershoot if the pandemic continues to weigh on the economy, potentially putting spending over the 1% mark. The planned budget request is equivalent to 1.01% to 1.02% of fiscal 2020 GDP.

Japanese Prime Minister Yoshihide Suga recently told Newsweek magazine that "the government of Japan does not adopt an approach to defense spending of keeping it within 1% of GDP." This echoed Defense Minister Nobuo Kishi's comment in a Nikkei interview in May that Tokyo will "properly allocate the funding we need to protect our nation," without worrying about a GDP ceiling.

The Japanese administered Senkaku Islands are claimed by China, which calls them Diaoyu. Beijing has been sending ships to near or into Japanese territorial waters to pressure Tokyo.     © Reuters

Additional purchases of fighter jets are expected to take up a large portion of the budget. The medium-term defense program for the five years through fiscal 2023 calls for buying 45 jets, but fewer than half these purchases will be on the books by the end of fiscal 2021. Top-of-the-line fighter jets cost more than 10 billion yen each.

Planned purchases include the cutting-edge F-35A stealth fighter and the F-35B, whose short-takeoff and vertical-landing capabilities are essential in the Nanseis, given their dearth of long runways.

The budget will also include electronic systems and missiles for the F-15 jets that form the backbone of the Air Self-Defense Force's fleet.

Upgrade costs in fiscal 2021 far exceeded initial estimates, and the Finance Ministry barred any further expenses from being booked in that year's budget. Work is set to resume this fiscal year once Tokyo wraps up negotiations with Washington to lower costs.

The 1% cap on defense budgets was established in 1976 under then-Prime Minister Takeo Miki, with a cabinet decision stating that defense spending would not exceed 1% of gross national product.

This stipulation was broken in fiscal 1987 by then-Prime Minister Yasuhiro Nakasone, who sought to scrap the ceiling altogether, but it still remained in place as an informal guideline. Since then, the cap was exceeded only in 2010, amid a slump in GDP caused by the global financial crisis.

Japan will develop long-range missiles that can be launched from outside enemies' ranges. Apart from developing ground-launched missiles, Japan will add modifications to them for launching from ships and aircraft. 

Japan will also allocate spending to equip ships with missile defense capabilities to replace the canceled Aegis Ashore missile defense systems. 

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