Chinese and North Korean threats to spur Japan’s defense expenditure through 2026, says GlobalData

Driven by the need to curtail the expanding influence of China along with its intention to change the global geo-strategic order in its favour, Japan has planned to increase its defense expenditure through 2026. Japan, China and Taiwan are party to the Senkaku Islands dispute, continuing to stake claim over the strategically important group of Islands. China’s aim to assimilate Taiwan presents a direct challenge to Japan as it has the potential to damage Japan’s claims. Also, Japan’s security is increasingly being jeopardised by an aggressive and unpredictable North Korean regime, whose ongoing ‘ballistic missile and nuclear’ programs present a direct threat to Japan, says GlobalData, a leading data and analytics company.

GlobalData’s report, ‘Japan Defense Market – Attractiveness, Competitive Landscape and Forecasts to 2026’, reveals that Japan’s defense expenditure is on course to register a strong compound annual growth rate (CAGR) of 7.33%, increasing from US$52.3bn in 2022 to US$69.4bn in 2026.

Research and Development (R&D) and defense acquisition spending is also set to register strong growth of 7.20%, increasing from US$30bn in 2022 to US$39.7bn in 2026. A large part of the funding will be directed towards the development of new cutting-edge defense technologies and equipment. These include development of the Mitsubishi X-2 Shinshin alongside the acquisition of additional units for Kawasaki C-2 transport aircraft, and the Kawasaki P-1 maritime patrol aircraft.

Abhijit Apsingikar, Aerospace & Defense Analyst at GlobalData, comments: “The Japanese-North Korean relations are plagued by great mistrust and hostility and thus remain extremely strained. The mutual relations touched a nadir in 2017, when North Korea, in an act of provocation, test fired two ballistic missiles into Japanese territorial waters. North Korea’s development of nuclear weapons, coupled with testing of ballistic missiles in 2017 and 2019, presents a major security risk for Japan. Hence, it is forced to increase investments in the development of an anti-ballistic missile defense system, which falls within the constitutionally permissible defensive capability enhancement.”

Japan is deeply wary of Chinese naval modernization and China’s stated position on Taiwan. Japan’s worry is aggravated by the increasing Chinese incursions within Japan’s territorial waters coupled with China’s plan to field a large naval fleet revolving around four aircraft carriers. Thus, initiatives to modernize the Japan Maritime Self-Defense Force (JMSDF) are likely to focus on the development of a robust sea-denial capability with the ability to operate in a blue-water environment, acting in support of its allies.

Mr Apsingikar continues: “All these factors collectively have compelled Japan to adopt a pragmatic stance on defense. Having already re-interpreted Article-9 of the Japanese constitution to facilitate development of a realistic defense posture, Japan will focus on the development robust deterrence and defensive military capabilities in support of their allies, while operating within the ambit of a defensive doctrine. Japan is likely to scrap its informal rule of capping defense expenditure to just under 1% of its GDP. Such a move will facilitate the conversion of Izumo class helicopter carriers into aircraft carriers and allow Japan to effectively finance acquisition of F-35B Lightning II aircraft.”

North Korea’s adoption of a hostile stance with respect to Japan precludes any possibility of compromise. Japan will thus be compelled to adopt a cautious defense posture to dissuade any North Korean aggression.

Mr Apsingikar concludes: “Even though an emphasis will be placed on strengthening and modernizing the Japan Air Self-Defense Force (JASDF) and the JMSDF, focus on the Ground Self-Defense Force (JGSDF) will not be lost. Japan’s Amphibious Rapid Deployment Brigade (ARBD) under the Japan Ground Self-Defense Force (JGSDF) created to be the first responders to Japan’s remote islands, will be expanded with the country raising its third regiment at Kyushu by 2023. Japan’s plans will account for the reality of being an archipelago of islands and the need to defend these from diverse threats.”

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