Japan needs to commit to increasing its defense spending for the long-term due to its proximity to an aggressive Russia, an ambitious China and an unpredictable North Korea armed with nuclear missiles, a senior observer of Tokyo’s security policy said this week.
“Japan will continue to increase its defense budget” to at least 2 percent of gross domestic product over the next five years, said analyst Hiroyaki Akita said an event at Center for Strategic and International Studies.
This increase will hold even if the government of Prime Minister Fumio Kishida would fall, Akita said.
He did not expect Japan to fall back into a previous “revolving door” prime minister-era that marked its politics between 2006 and 2012, which would change Tokyo’s commitment on defense spending. The key difference is the strong support for the governing Liberal Democratic Party now and its control of both houses of the Japanese Diet.
At the same time, with the changed security challenges in Northeast Asia, Akita expected Japan to work more closely with the United States while also reaching out to the U.K., France and Vietnam for greater security cooperation.
Akita called the agreement to significantly up defense sending a major decision that “requires very strong leadership” domestically. That means focusing more on Okinawa for its proximity to China and the presence of a large number of American and Japanese military installations on the island. He added persuading the Okinawa population to go along with the increased spending and the establishment of more military infrastructure to store ammunition and missiles might be difficult.
Paying for this increase by raising taxes, issuing more bonds or cutting services is going to be a challenge, Shihoro Goto, director for geoeconomics and Indo-Pacific enterprise at the Wilson Center said.
“Japan is not alone in facing economic stressors” in the post-COVID-19 pandemic era, Goto said. Its GDP is only expected to grow 1.7 percent in the coming year while Tokyo continues having to service a large national debt. She added Japan also has an aging population needing more services but with fewer taxpayers’ to cover those costs.
Tax increases are “politically very painful,” Akita said. If they are to happen, he said the increases were not likely to be imposed on consumption items, but on income and corporate taxes.
In Japan, spending cuts are unpopular, Goto said. “Japan is a very, very generous state” when compared to the United States in its spending on health and childcare and providing for higher education.
She and Akia agreed a possible way to up defense spending, using the NATO model, was to raise budgets in ministries that foster innovation and dual-use technologies.
Complicating Tokyo’s relations with Washington currently is the CHIPS Act aimed at returning semi-conductor manufacturing to the United States and cutting off high-technology sales to Beijing, Goto said. What is not clear to Japan, Korea and Taiwan is how the new “export policy is expected to move into other key sectors” than microchips.
Goto said the act creates “a very difficult stage for the private sector.” The affected allies and partners need to have more buy-in as the policy unfolds.
The economic competition between Japan and its allies with China should not be limited to technology but expanded to “include values [and] good governance” that “could resonate with other nations,” she said.
Among the encouraging signs on Sino-Japanese relations was the establishment of a military hotline between the two nations and the creation of a maritime discussion arrangement. While not resolving major issues between the two countries over potential flashpoints like the Senkaku Islands, the two leaders said they wanted a “constructive and stable relationship.”
Akita termed Japan’s goal in its relations with China “is to achieve a cold peace.” He added, “I think China understands” that Japan is not drifting away from its alliance with the United States.