Japan has finalized its defense budget for the fiscal year starting April 2024 at 7.95 trillion yen ($55.76 billion), over 1.13 trillion yen, or 16 percent, more than that in the last fiscal year. The decision was taken on Dec 22. Additionally, the Japanese government has decided to relax weapon export controls by shipping Patriot defense missiles to the United States, marking a significant shift in Japan's defense policy since World War II.

In the budget, Japan has allocated around 2 trillion yen to address its spare parts shortage and increase its conflict readiness; approximately 930 billion yen to build up its ammunition reserves to improve sustained combat capability; about 800 billion yen for the maintenance of its Self-Defense Forces' facilities and the improvement of ammunition depots; around 380 billion yen for the construction of an "Aegis" warship, which is expected to enter service by 2027; and approximately 640 billion yen for jointly developing next-generation fighter jets with the United Kingdom and Italy.

Moreover, Japan aims to increase investment in the development of hypersonic missiles, precision-guided missiles and the acquisition of new naval vessels. Particularly noteworthy is Japan's plan to introduce approximately 30 mobile landing craft and transport helicopters for the rapid deployment of SDF troops and supplies in its southwestern islands. About 400 billion yen is allocated for this purpose. Japan will also establish an SDF maritime transport group by integrating the ground, maritime, and air SDF to facilitate the deployment of forces and supplies to the southwest islands.

Given that Japan has identified China as its "greatest strategic challenge ever", the significant defense spending in its southwest islands is clearly aimed at China. One should read this in light of the US having just passed a military budget worth $886 billion for the coming fiscal year, with China presented as cause for concern. The way it is sprinting toward 430 trillion yen in defense expenditure in the next five years, Japan must worry about the risks it may pose to its debt burden in the future.