Japan Is Becoming the World’s Third-Largest Military Spender. How Should We Feel About That?

Japan is on course to have the world’s third-largest defense budget, a transformation that would have seemed impossible to predict just a decade ago for a country that had maintained one of the world’s most constrained defense postures since 1945. Al Jazeera reported that Japan’s plan to double defense spending from one percent to two percent of GDP will, when fully implemented, position Japan behind only the United States and China in absolute defense expenditure. This is not merely a budgetary change; it represents the most fundamental revision of Japan’s security posture since the postwar constitutional settlement, driven by a security environment that has deteriorated in ways that Japan’s previous defense assumptions could no longer accommodate.

The threat environment driving Japan’s rearmament is specific and proximate, not abstract or hypothetical. China’s military modernization under President Xi Jinping has proceeded at a pace and with a level of sophistication that has substantially changed the regional military balance. Beijing’s explicit position that Taiwan’s unification with the mainland must be achieved, by force if necessary, and its demonstrated willingness to use military coercion in the South China Sea and against Japanese vessels near the Senkaku Islands, has forced Japanese strategic planners to develop responses to contingencies that previous generations could treat as remote. North Korea’s nuclear arsenal and its ongoing ballistic missile testing provide a direct and immediate threat to Japanese territory. Russia’s invasion of Ukraine demonstrated that nuclear-armed states can engage in territorial conquest by conventional military force, eroding the assumptions underlying Japan’s northern defense posture.

The 2022 National Security Strategy, National Defense Strategy, and Defense Buildup Program collectively represent the most significant revision of Japan’s defense policy framework since the postwar Constitution. These documents, released simultaneously in December 2022, maintained the formal commitment to an exclusively defense-oriented posture while explicitly authorizing the acquisition of what the documents call counterattack capability — the ability to strike enemy missile launch sites and command and control infrastructure to prevent or interrupt attacks on Japan. The authorization of this capability represents a fundamental change in Japan’s defensive architecture: rather than relying entirely on missile defense to absorb incoming attacks, Japan will develop the ability to hold threatening forces at risk before they can launch.

The specific systems being acquired to implement the counterattack capability reveal the range and ambition of Japan’s deterrence planning. In addition to acquiring Tomahawk cruise missiles from the United States, Japan is developing and deploying a family of domestically developed standoff strike systems — the Type 12 missile in extended range variants, high-speed glide weapons, and hypersonic glide vehicles. Systems with ranges exceeding 1,000 kilometers give Japan the ability to hold targets in mainland China, the Korean Peninsula, and Russian territory at risk. This is an extraordinary capability for a country that maintained for decades a self-imposed prohibition on weapons that could only be used offensively. The strategic logic is straightforward: effective deterrence requires making potential adversaries calculate that aggression will produce unacceptable costs.

The fiscal sustainability of Japan’s defense expansion is the most significant uncertainty hanging over the entire program. Doubling defense spending to two percent of GDP means allocating approximately 10 trillion yen annually to defense — roughly double the current defense budget — sustained indefinitely. The government has proposed funding this through a combination of corporate tax increases, income tax increases, and tobacco tax increases, along with the possible extension of the reconstruction special income tax originally levied to fund recovery from the 2011 earthquake. Critics argue that increasing defense spending while demographic aging continues to expand social security obligations creates an unsustainable fiscal trajectory. Supporters counter that the costs of inadequate deterrence — measured in the probability and consequences of a major war — far exceed the fiscal costs of maintaining credible defenses.

The development of Japan’s defense industrial base is an integral part of the buildup that often receives less attention than the headline spending numbers. Japan’s defense industry has operated in a closed domestic market, producing small quantities of high-quality but expensive systems for a single customer. The revision of the Three Principles on Transfer of Defense Equipment and Technology has opened pathways for export that were previously closed. Japan-UK-Italy development of the next-generation fighter aircraft under the Global Combat Air Programme, technology cooperation with Australia on submarine systems, and patrol aircraft exports to the Philippines represent the beginning of Japanese defense industry integration into international defense markets. Scale is necessary for cost reduction and technology maintenance in defense manufacturing; export markets provide scale.

Article 9 of Japan’s Constitution and its interpretation in the context of expanding defense capabilities represents a tension that formal legal reasoning cannot fully resolve. Article 9 renounces war and prohibits the maintenance of war potential, language that the postwar Japanese legal consensus has interpreted as permitting Self-Defense Forces for genuinely defensive purposes while prohibiting capabilities that could only be used offensively. The acquisition of long-range strike capabilities stretches this interpretation to its limits, as critics note that weapons capable of hitting targets in mainland China are difficult to characterize as purely defensive. The government’s response — that strikes on enemy missile launch sites before they can be used are a form of self-defense — is legally arguable but represents a significant departure from the doctrine’s original intent.

The reactions of Japan’s neighbors to its defense buildup are complex and not uniformly critical. China condemns what it characterizes as the revival of Japanese militarism, a rhetorical frame that has domestic political uses but overlooks the Chinese military buildup that is driving Japanese responses. South Korea’s reactions are complicated by historical sensitivities about Japanese military power, but strategic logic pushes Seoul toward quiet acceptance of Japanese capability enhancement that adds to the deterrence architecture facing North Korea and China. Australia, the Philippines, and other regional partners actively welcome Japanese military capability development as a contribution to regional security. The United States has consistently encouraged Japan’s enhanced defense investment as a more capable ally contribution to shared deterrence.

The transformation of Japan’s role within the US-Japan alliance from primarily a burden-sharing to a genuine capability-sharing partnership has strategic implications that extend beyond the bilateral relationship. Japan’s acquisition of counterattack capabilities means that in contingency scenarios involving China or North Korea, American and Japanese forces could coordinate offensive operations against common targets — a level of operational integration that was not possible under Japan’s previous defense posture. This integration increases the credibility of the combined deterrence architecture but also raises questions about command and control arrangements, decision-making procedures, and the conditions under which Japan would use its new capabilities independently versus in coordination with American forces.

Investment in cyber, space, and electromagnetic domain capabilities represents a critical component of Japan’s defense modernization that receives insufficient public attention relative to conventional weapons acquisitions. Modern warfare’s decisive domain is increasingly informational and electronic: disrupting adversary command and control, protecting one’s own satellite communications, and maintaining battlefield awareness through persistent surveillance all require capabilities in domains that are not visible in traditional order-of-battle assessments. Japan’s Self-Defense Forces have historically underpowered in these new domains. The defense budget increases are enabling accelerated investment that closes this gap, but building the human capital — the operators, analysts, and engineers — required to fully exploit these investments takes time that money alone cannot substitute.

The relationship between Japan’s defense buildup and its diplomacy toward China requires continuous careful management. China is Japan’s largest trading partner, and the economic interdependence between the two countries is deep. A defense posture that China perceives as aimed at regime change or territorial revisionism rather than genuine deterrence of Chinese coercion would produce responses that undermine the economic relationship without enhancing security. Japan needs to consistently communicate that its military capability development is defensive — aimed at making aggression costly rather than enabling Japanese offense — while maintaining sufficient ambiguity about specific capabilities to preserve deterrence value. Threading this needle requires sophisticated signaling that Japan’s foreign policy establishment is still developing the tools to execute.

Japan’s experience will be watched closely by other democracies with similar constitutional constraints on military power considering how to respond to their own deteriorating security environments. Germany’s Zeitenwende, South Korea’s debates about nuclear capabilities, Australia’s AUKUS submarine acquisition — all reflect similar pressures driving similar reassessments. Japan’s case is instructive because the constitutional framework, the history of militarism, and the geographic proximity to multiple nuclear-armed potential adversaries make the challenges Japan faces particularly concentrated. How Japan manages the combination of enhanced military capability with the democratic accountability, civilian control, and strategic restraint that distinguish its defense posture from the historical militarism that Article 9 was designed to prevent will shape how other countries approach similar transitions.

The optimistic scenario has Japan’s enhanced deterrence producing the stability that deterrence theory predicts when capability is sufficient and intentions are clearly defensive. Adversaries who calculate that aggression against Japan or its allies would produce unacceptable costs — from Japanese counterattack capabilities, American extended deterrence, and regional coalition responses — choose coercive diplomacy over military action. The probability of the wars that Japan’s defense buildup is designed to prevent declines. The resources invested in defense produce security returns that justify their fiscal costs. This is the logic that justifies the buildup, and it is not an unreasonable expectation if the diplomatic dimensions are managed competently alongside the military ones.

The pessimistic scenario involves Japan’s military expansion triggering Chinese countermeasures that accelerate regional arms racing and increase rather than decrease the probability of conflict. Chinese domestic political narratives frame Japan’s defense buildoup as threatening rather than defensive, creating pressure on Chinese leaders to respond with enhanced military postures toward Japan. If both countries are simultaneously enhancing capabilities aimed at each other while the diplomatic channels for managing the resulting anxieties deteriorate, the conditions for conflict by miscalculation improve. The historical record of arms racing — not always, but with notable frequency — producing the conflicts that each side’s military planners claimed they were building forces to deter should produce caution alongside deterrence investment.

Japan’s defense transformation ultimately requires a national conversation about the kind of country Japan wants to be in a security environment that has changed in ways that the postwar consensus was not designed to address. The constitutional settlement of 1947 reflected a particular understanding of Japan’s national character, its historical responsibilities, and the international conditions under which it would live. Those conditions have changed in ways that the settlement’s authors could not fully anticipate. Revising Japan’s security posture through administrative interpretation rather than transparent constitutional revision defers the democratic legitimation process that a change of this magnitude arguably requires. Whether Japan’s political system has the capacity for an honest national reckoning about security, history, and identity in parallel with the practical defense investments underway is a question with implications for the coherence and sustainability of the transformation itself.

The Self-Defense Forces’ recruiting crisis represents the most immediate practical constraint on Japan’s defense expansion plans, and it cannot be resolved by budget increases alone. Japan’s demographic decline has reduced the cohort from which military recruits are drawn at precisely the moment when the government is seeking to expand force size. Retention rates have also suffered as the SDF competes for talent with private sector employers offering increasingly attractive compensation. The fundamental human capital challenge — building and maintaining the workforce needed to operate advanced military systems, manage logistics networks, and conduct joint operations with alliance partners — requires a comprehensive strategy of compensation improvements, expanded career pathways, gender integration, and effective utilization of reserve components that goes well beyond equipment procurement. Military effectiveness in modern warfare is determined as much by the quality and commitment of personnel as by the sophistication of equipment.

The constitutionality of counterattack capabilities is genuinely contested among legal scholars, and the government’s management of this constitutional tension has long-term implications for democratic governance. Japan’s postwar constitutional settlement was built on the principle that the Diet’s interpretation of the Constitution, expressed through statute and cabinet resolutions, would be the primary mechanism for adapting constitutional limits to changing circumstances. This flexibility has allowed Japan to maintain a meaningful military posture without formal constitutional amendment. But the accumulation of interpretive expansions — from purely passive defense to limited offensive capability — reaches a point where the gap between constitutional text and operational capability becomes difficult to explain. Whether Japan should resolve this gap through formal constitutional amendment, continue managing it through interpretation, or develop new institutional mechanisms for democratic authorization of expanding military activities is a question that Japan’s political system has consistently deferred but cannot defer indefinitely.

The development of a robust Japanese defense industrial base has implications for Japan’s strategic autonomy that go beyond the immediate military value of domestic production. A country that depends on foreign suppliers for critical defense equipment faces an inherent vulnerability: the supplier country can limit or condition deliveries in ways that constrain the recipient country’s freedom of action. Japan’s dependence on American defense systems creates a structural constraint on Japanese strategic autonomy even within the alliance, because American technology transfer and export control decisions shape what capabilities Japan can develop and deploy. Investment in domestic defense research and development, combined with the international industrial partnerships that GCAP represents, is a long-term effort to reduce this dependency and give Japan greater flexibility in how it manages its security.

Japan’s defense buildup, seen from the perspective of smaller Asian nations watching the strategic competition between major powers, raises complex questions about regional security order. Many Southeast Asian countries view the US-Japan alliance as a stabilizing presence in the region, but are cautious about Japanese military expansion that could either provoke Chinese responses that destabilize the region or create Japanese independence of action that reduces American constraints on Japanese behavior. Historical memories of Japanese imperialism, while not determinative of contemporary policy, remain politically relevant in Korea, China, and parts of Southeast Asia in ways that shape how Japan’s defense expansion is received. Managing these perceptions — through multilateral engagement, transparent communication about defensive intentions, and investment in the positive elements of Japan’s regional relationships — is as important as managing the military capability development itself.

The question of nuclear deterrence and Japan’s reliance on American extended deterrence becomes increasingly complex as Japan develops greater conventional military capability. Japan’s security depends on the American commitment to extended nuclear deterrence — the guarantee that a nuclear attack on Japan would be treated as an attack on the United States. The credibility of this commitment depends partly on American willingness to risk nuclear escalation on Japan’s behalf, which creates an inherent question about the conditions under which the commitment holds. As Japan develops greater conventional military capability, it has more independent capacity to defend against conventional threats, but its nuclear vulnerability remains entirely dependent on American protection. The gap between Japan’s growing conventional capability and its continued nuclear dependence creates strategic questions that Japan has addressed through the Nuclear Deterrence and Disarmament Commission and related processes but that do not have easy policy answers.

The fiscal sustainability of Japan’s defense expansion over the long term depends on achieving economic growth that expands the GDP base from which defense spending is calculated. Defense spending at two percent of GDP remains affordable if the economy grows; it becomes progressively more constraining if the economy stagnates. Japan’s long struggle to escape the deflationary trap of its own lost decades, and its current vulnerability to multiple simultaneous economic shocks, means that the economic foundation of the defense expansion is not fully secure. This creates an argument for the proposition that Japan’s most effective long-term security investment is in economic growth and resilience, because a strong economy sustains military capability more reliably than defense budgets alone can. The integration of economic and security policy — ensuring that resources allocated to defense produce both direct military value and spillover benefits for economic productivity — is a challenge that Japan’s policy architecture has not fully addressed.

The moral and historical dimensions of Japan’s rearmament, while often marginalized in strategic analysis, matter for the domestic political sustainability of the policy and for Japan’s international reputation. Japan’s pacifist postwar identity was not simply a strategic constraint imposed by the Constitution; it reflected a genuine national reckoning with the consequences of militarism and a commitment to a different kind of national existence. The transition toward greater military capability requires an honest national conversation about what changed in the external environment to make that commitment impossible to maintain fully, what elements of the pacifist tradition remain valid and valuable, and what Japan’s obligations to its neighbors — including countries that suffered under Japanese imperialism — are as it develops military power. This conversation is occurring in Japan but often in forms that substitute legal and strategic argument for the moral reflection that the historical context demands.

The relationship between Japan’s military capability development and the broader project of building a rules-based international order in the Indo-Pacific requires explicit articulation that Japanese security communications have not always provided clearly. Japan’s strategic vision, when it can be inferred from policy documents and official statements, is not simply to build power for its own sake but to preserve the international conditions — freedom of navigation, respect for international law, peaceful resolution of disputes — that have enabled Japanese and regional prosperity. Making this vision explicit, and demonstrating how specific military capabilities serve it, is important both for domestic political legitimacy and for international credibility. Countries that are uncertain about Japan’s strategic intentions will evaluate Japan’s military buildup differently from countries that understand it as a contribution to shared security goals.

The integration of space and cyber capabilities into Japan’s defense architecture represents one of the most significant but least publicly understood dimensions of the defense buildup. Space-based intelligence, surveillance, and reconnaissance is foundational to the counterattack capability that Japan has announced — without the ability to locate and track adversary missile launch sites, the capability to strike them is operationally useless. Japan has invested substantially in its own satellite constellation for defense purposes, reducing but not eliminating dependence on American space-based intelligence. Cyber capabilities represent both an offensive tool and a critical defensive requirement: critical infrastructure protection against cyberattack is a defense challenge that goes beyond conventional military investments and requires collaboration with the private sector and with allied governments that share intelligence about adversary cyber operations.

The generational dimension of Japan’s security policy transformation is important for understanding both its sustainability and its limitations. Japanese public opinion on defense issues has shifted substantially since the 2010s: younger Japanese are more likely to support enhanced defense investment and less likely to hold the pacifist principles that shaped postwar Japanese political culture as absolute constraints on policy. But the depth and durability of this shift in public opinion — whether it reflects a genuine change in values or simply a response to changed security circumstances that might reverse if security conditions improved — is not fully established. Defense policymakers building programs that require sustained multi-decade commitment must design those programs with resilience against future political environments that might be less supportive than the current one.