Economic policy

Economic policy draft calls on Japan to ‘significantly strengthen’ its military capability

Japan is aiming to “significantly boost” its military capabilities, according to an economic policy draft seen by Reuters, amid fears that Russia’s invasion of Ukraine could cause instability in East Asia.

Prime Minister Fumio Kishida, meeting with US President Joe Biden on Monday, pledged to “substantially increase” Japan’s defense budget.

The draft, a long-term economic outlook that is updated annually, does not give details of spending, but says for the first time: “There have been attempts to unilaterally change the status quo by force in East Asia, making regional security increasingly severe. .”

It also does not specify security threats in the region, but Japanese military planners have repeatedly expressed concern about China, with which Japan has a long-standing territorial dispute, and South Korea. North.

Kishida’s press conference with Biden was dominated by the president saying the United States would be prepared to use force to defend Taiwan against Chinese aggression.

“We will significantly strengthen defense capabilities that will be the ultimate guarantee to ensure national security,” the draft document said.

Former Prime Minister Shinzo Abe on Thursday called for nearly 7 trillion yen ($60 billion) in defense spending for the next fiscal year, up from 5.4 trillion yen in this year’s original budget. , in light of China’s growing military spending and North Korea’s missile threats, Nippon Television Network reported.

“It is natural (for the government) to ensure defense spending equivalent to 2% of GDP,” said Abe, who still wields considerable influence as the head of the largest faction of the ruling Liberal Democratic Party.

Kishida did not say how much he wants to increase military spending for the fiscal year beginning in April 2023.

Increased defense spending will strain Japan’s already dire public finances.

“There’s no end to spending pressures,” said Takuya Hoshino, senior economist at the Dai-ichi Life Research Institute.

The lower house of parliament on Friday approved a supplementary budget worth 2.7 trillion yen, funded by bond sales, to cushion the blow to households and businesses from rising fuel and material prices. raw. The upper house is expected to enact the budget next week.

With Kishida facing a national election in July, another supplementary budget “is almost a done deal,” Hoshino said. “The question is how to get financing, other than having to rely on ultra-low borrowing costs provided by the Bank of Japan.”