TOKYO -- Japanese Prime Minister Yoshihide Suga has just completed a hectic diplomatic schedule that began with a meeting with U.S. President Joe Biden in April and ended with the Group of Seven leaders' summit in Cornwall, England.
At last, the prime minister can say he has paved the way for closer ties with the U.S. and Europe as Japan deals with China and brings to fruition a vision of a "free and open Indo-Pacific" that he espouses.
But does Japan have the capacity to fulfill its commitments?
Unfortunately, that does not seem to be the case. The biggest problem is Japan's extremely modest defense budget.
At a little more than 5 trillion yen ($45.2 billion), the nation's defense budget comprises about 1% of its gross domestic product. While the budget continued to grow slightly between fiscal 2013 and fiscal 2021, Japan's defense spending as a percentage of GDP is the lowest among G-7 countries.
In contrast, China's defense spending over the past eight years has swelled to four times that of Japan's. In addition to economic might, Beijing now has tremendous military influence. Meanwhile, North Korea has become a nuclear power and Russia has continued to boost its military capabilities in Asia.
Noting Japan is surrounded by nuclear powers such as China, North Korea and Russia, it "is located in the world's most dangerous place," according to one European diplomat.
During the term of former Prime Minister Shinzo Abe between 2012 and 2020, Japan strengthened its security system dramatically and tightened cooperation with the U.S. and its allies. In 2013 it established the National Security Council as the command base for Japan's foreign and security policies, and in 2016 it enacted national security laws authorizing collective self-defense with the U.S. under certain conditions for the first time since World War II, despite strong objections from opposition parties.
Nevertheless, there is a limit as to how vastly military capabilities can improve under the current defense budget. Past funding sufficed when the U.S. was the lone global superpower, but "U.S. forces are no longer superior to the Chinese military in Asia," a former senior U.S. defense department official said. It can therefore be deduced that Japan's stability is unlikely to hold fast at current budgetary levels, regardless of a strong Japan-U.S. alliance.
In view of the escalated military preparedness across Northeast Asia, South Korea has acted more decisively than Japan in increasing its defense budget. Between fiscal 2018 and fiscal 2020, the administration under President Moon Jae-in, who took office in 2017, has sharply increased its defense budget by between 7% and 8.2% year-on-year.
According to data compiled by the U.S. Central Intelligence Agency, South Korea allocates 2.7% of its GDP to defense, which is more than other G-7 countries spend, except for the U.S. In fact, South Korea said it planned to spend about 301 trillion won ($264.3 billion) on defense in its five-year defense plan through 2025.
Not counting U.S. base relocation costs and other expenses, Japan's defense budget was overtaken by South Korea in fiscal 2018 when measured in purchasing power. If exchange rates stay unchanged, South Korea's actual defense spending is expected to overtake Japan's by about fiscal 2023, based on fiscal 2021 growth rates.
Even counting its extra budget and other expenditures, Japan's defense budget still has grown by only about 1% in recent years. One need not be a mathematician to see that the gap between Japan and South Korea's spending in this area will widen.
Of course, Japanese leaders, including the prime minister, are well aware that Japan lags behind South Korea in defense spending. While Abe was in power, the topic was on occasion discussed secretly during meetings at the prime minister's office, according to some government and Liberal Democratic Party officials.
A yearslong economic slump in Japan gave rise to dire financial circumstances in which Japan's defense budget could only expand marginally. In fiscal 2021, for example, Japan's tax revenues came to just 57 trillion yen against the annual budget of 106.6 trillion yen. In addition, as much as 70% of Japan's annual budget is spent on social security costs, debt service costs and subsidies to local governments. The country's debt-to-GDP ratio of 265% is by far the highest among developed countries, far outstripping Italy's 158% and the U.S.'s 134%.
Given the country's tight fiscal situation, it will not be easy for Japan to increase its defense budget rapidly. But South Korea, whose population is about 40% of Japan's and is also aging rapidly, faces a similar challenge, and it is planning to spend much more on defense than Japan in actual terms.
Many Japanese, including this writer, tend to be critical of South Korea's foreign policy. We often pour scorn on South Korea for being soft on China, indulging North Korea and lacking strategy. Some fault-finding might be valid, but Japan should be worried now about its own security before minding South Korea's business. At least when it comes to defense spending, South Korea's strategy seems to be more reasonable than Japan's.
In what areas does South Korea invest? Park Young-june, professor at Korea National Defense University, identified two areas.
One is a South Korean-styled missile defense system and reconnaissance capabilities to deal with North Korea's improved nuclear and missile capabilities. The idea is to assume operations now carried out by U.S. forces stationed in South Korea and take back wartime operational control held by U.S. forces.
The other focus is strengthening naval power, particularly shipping lanes stretching from the Middle East to South Korea. This entails the deployment of new Aegis destroyers and light aircraft carriers.
The crucial point of both investments is for South Korea to cut reliance on U.S. forces and improve its own defense. Dealing with North Korea is cited as the main reason so as not to provoke China, but "the threat of the Chinese military is being considered as well," said a South Korean official.
"Chinese fishing boats and Chinese military vessels have flocked to waters near South Korea in recent years, and Chinese military aircraft have also frequently entered South Korea's air-defense identification zones," said Kohtaro Ito, a senior research fellow at the Canon Institute for Global Studies who is familiar with South Korea's security strategy.
"South Korea has been beefing up its naval and air capabilities to better counter the Chinese military, too."
Some observers say that South Korea, which is connected with North Korea by land, is in a quasi-state of war and thus its strategic posture is not entirely instructive for Japan. But given that Chinese government ships keep entering Japanese territorial waters off the Senkaku Islands, Japan is arguably close to being in a quasi-state of war.
Japan should also seriously assess the positive and negative effects brought on by South Korea's actions. "Operating on the assumption that South Korea will remain a U.S. ally for years to come, a South Korea that is strong and stable rather than weak and unstable would be more beneficial for Japan," said Junya Nishino, a Keio University professor who is an expert on South Korea.
In the meantime, if South Korea overtakes Japan in terms of military power, Seoul will likely have the upper hand on Tokyo in diplomacy and conflicting views over history.
This writer is not trying to assert that Japan should proceed with military expansion. Quite the opposite. For Japan, it is best to avoid unnecessary provocations and quietly continue making the requisite investments for its defense.