Japan will boost its military spending in coming years, buying early-warning planes, beach-assault vehicles and troop-carrying aircraft, while seeking closer ties with Asian partners to counter a more militarily assertive China.
The planned 2.6 percent increase over five years, announced on Tuesday, reverses a decade of decline and marks the clearest sign since Prime Minister Shinzo Abe took office a year ago that he wants a bigger military role for Japan as tension flares with Asia's other big power over islands both claim.
Abe's top priority has been reviving a long-sluggish economy, but he has also pledged to strengthen Japan's military and boost its security profile to meet what he says is a threat from China's rapid military buildup and recent actions to back its claims to Japanese-held islands in the East China Sea.
"China is attempting to change the status quo by force in the skies and seas of the East China Sea and South China Sea and other areas, based on its own assertions, which are incompatible with the established international order," Japan said in its first national security strategy, one of three plans approved on Tuesday.
"China's stance toward other countries and military moves, coupled with a lack of transparency regarding its military and national security policies, represent a concern to Japan and the wider international community and require close watch."
Abe's government also vows to review Japan's ban on weapons exports, a move that could reinvigorate struggling defence contractors like Mitsubishi Heavy Industries Ltd <7011.T> and Kawasaki Heavy Industries Ltd <7012.T>.
The policies, including a five-year military buildup plan and a 10-year defence guideline, call for stronger air and maritime surveillance capabilities and improved ability to defend far-flung islands through such steps setting up a marine unit, buying unarmed surveillance drones and putting a unit of E-2C early-warning aircraft on Okinawa island in the south.
Japan will budget 23.97 trillion yen over the coming five years for defence spending, up from 23.37 trillion yen from the previous five years. Under current procurement practices, the five-year spending would have been 24.67 trillion yen, but the government expects to save 700 billion yen from streamlining procedures to cut costs, officials said.
Military spending had fallen for 10 years until Abe boosted the defence budget 0.8 percent this year. The Defense Ministry is seeking a 3 percent rise in the year from next April, the biggest increase in 22 years, although much of the growth reflects higher import costs due to a weaker yen.
In the two decades through last year, Japan remained the sixth-biggest military spender, just behind Britain, with outlays rising 13 percent in constant 2011 dollar terms, according to the Stockholm International Peace Research Institute.
By contrast, China's defence spending exploded more than five-fold, vaulting the country to second place from seventh. The Japanese plans are sure to anger China, which has already criticised drafts of the policies. "China is closely watching Japan's security strategy and policy direction," China's Foreign Ministry spokesman, Hong Lei, said on Wednesday.
"Japan's unreasonable criticism of China's normal maritime activities and its hyping up of the China threat has hidden political motives." Past Japanese governments have stretched the limits of a postwar Constitution that renounces war and says Japan will never have an army or navy.
Abe wants to go further, including lifting a ban on fighting overseas or aiding an ally under attack, such as a U.S. Navy ship attacked by a North Korean missile.