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  • Japan’s Cabinet OKs record defense budget that aims to deter China

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    Japan’s Cabinet on Friday approved a record defense budget plan exceeding 9 trillion yen ($58 billion) for the coming year, aiming to fortify its strike-back capability and coastal defense with cruise missiles and unmanned arsenals as tensions rise in the region.The draft budget for fiscal 2026, beginning April, is up 9.4% from 2025 and marks the fourth year of Japan’s ongoing five-year program to double annual arms spending to 2% of gross domestic product.“It is the minimum needed as Japan faces the severest and most complex security environment in the postwar era,” Defense Minister Shinjiro Koizumi said, stressing his country’s determination to pursue military buildup and protect its people.“It does not change our path as a peace-loving nation,” he said.The increase comes as Japan faces elevated tension from China. Japanese Prime Minister Sanae Takaichi said in November that her country’s military could get involved if China were to take action against Taiwan, the self-governing island that Beijing says must come under its rule.Takaichi’s government, under U.S. pressure for a military increase, pledged to achieve the 2% target by March, two years earlier than planned. Japan also plans to revise its ongoing security and defense policy by December 2026 to further strengthen its military.Missiles and drones will add to southwestern island defenseJapan has been bolstering its offensive capability with long-range missiles to attack enemy targets from a distance, a major break from its post-World War II principle limiting the use of force to its own self-defense.The current security strategy, adopted in 2022, names China as the country’s biggest strategic challenge and calls for a more offensive role for Japan’s Self-Defense Force under its security alliance with the U.S.The new budget plan allocates more than 970 billion yen ($6.2 billion) to bolster Japan’s “standoff” missile capability. It includes a 177 billion yen ($1.13 billion) purchase of domestically developed and upgraded Type-12 surface-to-ship missiles with a range of about 1,000 kilometers (620 miles).The first batch of the Type-12 missiles will be deployed in Japan’s southwestern Kumamoto prefecture by March, a year earlier than planned, as Japan accelerates its missile buildup in the region.The government believes unmanned weapons are essential, in part due to Japan’s aging and declining population and its struggles with an understaffed military.To defend the coasts, Japan will spend 100 billion yen ($640 million) to deploy “massive” unmanned air, sea-surface and underwater drones for surveillance and defense under a system called SHIELD planned for March 2028, defense ministry officials said.For speedier deployment, Japan initially plans to rely mainly on imports, possibly from Turkey or Israel.Tension with China growsThe budget announcement comes as Japan’s row with China escalates following Takaichi’s remark in November that the Japanese military could get involved if China were to take action against Taiwan, the self-governing island that Beijing claims as its own.The disagreement escalated this month when Chinese aircraft carrier drills near southwestern Japan prompted Tokyo to protest when Chinese aircraft locked their radar on Japanese aircraft, which is considered possible preparation for firing missiles.The Defense Ministry, already alarmed by China’s rapid expansion of operations in the Pacific, will open a new office dedicated to studying operations, equipment and other necessities for Japan to deal with China’s Pacific activity.Two Chinese aircraft carriers were spotted in June, almost simultaneously operating near the southern Japanese island of Iwo Jima for the first time, fueling Tokyo’s concern about Beijing’s rapidly expanding military activity far beyond its borders and areas around the disputed East China Sea islands.In Beijing, China’s Foreign Ministry spokesperson Lin Jian said the Takaichi government has “noticeably accelerated its pace of military buildup and expansion” since taking office.”Japan is deviating from the path of peaceful development it has long claimed to uphold and is moving further and further in a dangerous direction,” Lin said.Japan plans joint development of frigates and jetsJapan is pushing to strengthen its largely domestic defense industry by participating in joint development with friendly nations and promoting foreign sales after drastically easing arms export restrictions in recent years.For 2026, Japan plans to spend more than 160 billion yen ($1 billion) to jointly develop a next-generation fighter jet with Britain and Italy for deployment in 2035. There are also plans for research and development of artificial intelligence-operated drones designed to fly with the jet.In a major boost to the country’s defense industry, Australia selected Mitsubishi Heavy Industries in August to upgrade the Mogami-class frigate to replace its fleet of 11 ANZAC-class ships.Japan’s budget allocates nearly 10 billion yen ($64 million) to support industry base and arms sales.Meeting targets but future funding uncertainThe budget plan requires parliamentary approval by March to be implemented as part of a 122.3 trillion yen ($784 billion) national budget bill.The five-year defense buildup program would bring Japan’s annual spending to around 10 trillion yen ($64 billion), making it the world’s third-largest spender after the U.S. and China. Japan will clear the 2% target by March as promised, the Finance Ministry said.Takaichi’s government plans to fund its growing military spending by raising corporate and tobacco taxes and recently adopted a plan for an income tax increase beginning in 2027. Prospects for future growth at a higher percentage of GDP are unclear.

    Japan’s Cabinet on Friday approved a record defense budget plan exceeding 9 trillion yen ($58 billion) for the coming year, aiming to fortify its strike-back capability and coastal defense with cruise missiles and unmanned arsenals as tensions rise in the region.

    The draft budget for fiscal 2026, beginning April, is up 9.4% from 2025 and marks the fourth year of Japan’s ongoing five-year program to double annual arms spending to 2% of gross domestic product.

    “It is the minimum needed as Japan faces the severest and most complex security environment in the postwar era,” Defense Minister Shinjiro Koizumi said, stressing his country’s determination to pursue military buildup and protect its people.

    “It does not change our path as a peace-loving nation,” he said.

    The increase comes as Japan faces elevated tension from China. Japanese Prime Minister Sanae Takaichi said in November that her country’s military could get involved if China were to take action against Taiwan, the self-governing island that Beijing says must come under its rule.

    Takaichi’s government, under U.S. pressure for a military increase, pledged to achieve the 2% target by March, two years earlier than planned. Japan also plans to revise its ongoing security and defense policy by December 2026 to further strengthen its military.

    Missiles and drones will add to southwestern island defense

    Japan has been bolstering its offensive capability with long-range missiles to attack enemy targets from a distance, a major break from its post-World War II principle limiting the use of force to its own self-defense.

    The current security strategy, adopted in 2022, names China as the country’s biggest strategic challenge and calls for a more offensive role for Japan’s Self-Defense Force under its security alliance with the U.S.

    The new budget plan allocates more than 970 billion yen ($6.2 billion) to bolster Japan’s “standoff” missile capability. It includes a 177 billion yen ($1.13 billion) purchase of domestically developed and upgraded Type-12 surface-to-ship missiles with a range of about 1,000 kilometers (620 miles).

    The first batch of the Type-12 missiles will be deployed in Japan’s southwestern Kumamoto prefecture by March, a year earlier than planned, as Japan accelerates its missile buildup in the region.

    The government believes unmanned weapons are essential, in part due to Japan’s aging and declining population and its struggles with an understaffed military.

    To defend the coasts, Japan will spend 100 billion yen ($640 million) to deploy “massive” unmanned air, sea-surface and underwater drones for surveillance and defense under a system called SHIELD planned for March 2028, defense ministry officials said.

    For speedier deployment, Japan initially plans to rely mainly on imports, possibly from Turkey or Israel.

    Tension with China grows

    The budget announcement comes as Japan’s row with China escalates following Takaichi’s remark in November that the Japanese military could get involved if China were to take action against Taiwan, the self-governing island that Beijing claims as its own.

    The disagreement escalated this month when Chinese aircraft carrier drills near southwestern Japan prompted Tokyo to protest when Chinese aircraft locked their radar on Japanese aircraft, which is considered possible preparation for firing missiles.

    The Defense Ministry, already alarmed by China’s rapid expansion of operations in the Pacific, will open a new office dedicated to studying operations, equipment and other necessities for Japan to deal with China’s Pacific activity.

    Two Chinese aircraft carriers were spotted in June, almost simultaneously operating near the southern Japanese island of Iwo Jima for the first time, fueling Tokyo’s concern about Beijing’s rapidly expanding military activity far beyond its borders and areas around the disputed East China Sea islands.

    In Beijing, China’s Foreign Ministry spokesperson Lin Jian said the Takaichi government has “noticeably accelerated its pace of military buildup and expansion” since taking office.

    “Japan is deviating from the path of peaceful development it has long claimed to uphold and is moving further and further in a dangerous direction,” Lin said.

    Japan plans joint development of frigates and jets

    Japan is pushing to strengthen its largely domestic defense industry by participating in joint development with friendly nations and promoting foreign sales after drastically easing arms export restrictions in recent years.

    For 2026, Japan plans to spend more than 160 billion yen ($1 billion) to jointly develop a next-generation fighter jet with Britain and Italy for deployment in 2035. There are also plans for research and development of artificial intelligence-operated drones designed to fly with the jet.

    In a major boost to the country’s defense industry, Australia selected Mitsubishi Heavy Industries in August to upgrade the Mogami-class frigate to replace its fleet of 11 ANZAC-class ships.

    Japan’s budget allocates nearly 10 billion yen ($64 million) to support industry base and arms sales.

    Meeting targets but future funding uncertain

    The budget plan requires parliamentary approval by March to be implemented as part of a 122.3 trillion yen ($784 billion) national budget bill.

    The five-year defense buildup program would bring Japan’s annual spending to around 10 trillion yen ($64 billion), making it the world’s third-largest spender after the U.S. and China. Japan will clear the 2% target by March as promised, the Finance Ministry said.

    Takaichi’s government plans to fund its growing military spending by raising corporate and tobacco taxes and recently adopted a plan for an income tax increase beginning in 2027. Prospects for future growth at a higher percentage of GDP are unclear.

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  • Japan PM Takaichi fills panel posts with advocates of big spending

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    By Leika Kihara and Yoshifumi Takemoto

    TOKYO (Reuters) -Japan’s reflationist advocates of expansionary fiscal policy are making a comeback in economic decision-making with some hand-picked by Prime Minister Sanae ​Takaichi to fill posts in key government panels.

    The move heightens the chance proponents of former premier Shinzo Abe’‌s “Abenomics” stimulus will yield influence on the fiscal and monetary policies of Takaichi, who herself is known as an advocate of loose ‌fiscal and monetary policy.

    Among the reflationist academics, former Bank of Japan Deputy Governor Masazumi Wakatabe will join the Council of Economic and Fiscal Policy as one of the four private-sector members, the government said on Friday.

    As the government’s top economic panel, the council lays out Japan’s long-term fiscal blueprint and policy priorities. Key economic ministers and the BOJ ⁠governor participate in the discussions.

    Known as a ‌proponent of aggressive monetary and fiscal stimulus, Wakatabe served at the BOJ from 2018 to 2023 when it was sustaining a massive asset-buying programme deployed under then governor Haruhiko Kuroda.

    In an ‍interview with Reuters last month, Wakatabe said the BOJ can raise interest rates if prospects of durably hitting its 2% inflation target improve – but added that doing so could this year could be difficult.

    Toshihiro Nagahama, an economist at Dai-ichi Life ​Research Institute who has advocated steps to stimulate demand, was also appointed as a private-sector member of the ‌council.

    “Given how this council discusses key economic and fiscal policies, we appointed members who are suitable under the Takaichi administration after consulting with the prime minister,” Minoru Kiuchi, economic revitalisation minister who oversees the council, told a news conference on Friday.

    The appointments contrast with those under previous premier Shigeru Ishiba such as BNP Paribas economist Mana Nakazora, who had called for fiscal discipline and faster normalisation of the BOJ’s ultra-loose monetary policy.

    The Takaichi administration has ⁠already appointed Takuji Aida, an economist seen as close to the ​premier, to join her flagship panel tasked to lay out Japan’​s growth strategy.

    Aida has said Japan should pursue expansionary economic policies until the output gap, which is currently around zero, exceeds 2%. He also calls for a shift away from ‍what he saw as current policies ⁠that prioritise fiscal consolidation over steps to stimulate demand.

    Japanese stock prices have risen since Takaichi was elected Japan’s first female prime minister on October 21 on market expectations that she will deliver a big spending package backed ⁠by low interest rates to reflate the economy.

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  • Japan’s parliament elects Sanae Takaichi as nation’s first female prime minister

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    Japan’s parliament elected ultraconservative Sanae Takaichi as the country’s first female prime minister Tuesday, a day after her struggling party struck a coalition deal with a new partner expected to pull her governing bloc further to the right.Takaichi replaces Shigeru Ishiba, ending a three-month political vacuum and wrangling since the Liberal Democratic Party’s disastrous election loss in July.Ishiba, who lasted only one year as prime minister, resigned with his Cabinet earlier in the day, paving the way for his successor.The LDP’s off-the-cuff alliance with the Osaka-based rightwing Japan Innovation Party, or Ishin no Kai, ensured her premiership because the opposition is not united. Takaichi’s untested alliance is still short of a majority in both houses of parliament and will need to court other opposition groups to pass any legislation – a risk that could make her government unstable and short-lived.“Political stability is essential right now,” Takaichi said at Monday’s signing ceremony with the JIP leader and Osaka Gov. Hirofumi Yoshimura. “Without stability, we cannot push measures for a strong economy or diplomacy.”The two parties signed a coalition agreement on policies underscoring Takaichi’s hawkish and nationalistic views.Their last-minute deal came after the Liberal Democrats lost its longtime partner, the Buddhist-backed Komeito, which has a more dovish and centrist stance. The breakup threatened a change of power for the LDP, which has governed Japan almost uninterrupted for decades.Later in the day, Takaichi, 64, will present a Cabinet with a number of allies of LDP’s most powerful kingmaker, Taro Aso, and others who backed her in the party leadership vote.JIP will not hold ministerial posts in Takaichi’s Cabinet until his party is confident about its partnership with the LDP, Yoshimura said.Takaichi is running on deadline — a major policy speech later this week, talks with U.S. President Donald Trump and regional summits. She needs to quickly tackle rising prices and compile economy-boosting measures by late December to address public frustration.While she is the first woman serving as Japan’s prime minister, she is in no rush to promote gender equality or diversity.Takaichi is among Japanese politicians who have stonewalled measures for women’s advancement. Takaichi supports the imperial family’s male-only succession and opposes same-sex marriage and allowing separate surnames for married couples.A protege of assassinated former Prime Minister Shinzo Abe, Takaichi is expected to emulate his policies including stronger military and economy, as well as revising Japan’s pacifist constitution. With a potentially weak grip on power, it’s unknown how much Takaichi would be able to achieve.When Komeito left the governing coalition, it cited the LDP’s lax response to slush fund scandals that led to their consecutive election defeats.The centrist party also raised concern about Takaichi’s revisionist view of Japan’s wartime past and her regular prayers at Yasukuni Shrine despite protests from Beijing and Seoul that see the visits as lack of remorse about Japanese aggression, as well as her recent xenophobic remarks.Takaichi has toned down her hawkish rhetorics. On Friday, she sent a religious ornament instead of going to Yasukuni.

    Japan’s parliament elected ultraconservative Sanae Takaichi as the country’s first female prime minister Tuesday, a day after her struggling party struck a coalition deal with a new partner expected to pull her governing bloc further to the right.

    Takaichi replaces Shigeru Ishiba, ending a three-month political vacuum and wrangling since the Liberal Democratic Party’s disastrous election loss in July.

    Ishiba, who lasted only one year as prime minister, resigned with his Cabinet earlier in the day, paving the way for his successor.

    The LDP’s off-the-cuff alliance with the Osaka-based rightwing Japan Innovation Party, or Ishin no Kai, ensured her premiership because the opposition is not united. Takaichi’s untested alliance is still short of a majority in both houses of parliament and will need to court other opposition groups to pass any legislation – a risk that could make her government unstable and short-lived.

    “Political stability is essential right now,” Takaichi said at Monday’s signing ceremony with the JIP leader and Osaka Gov. Hirofumi Yoshimura. “Without stability, we cannot push measures for a strong economy or diplomacy.”

    The two parties signed a coalition agreement on policies underscoring Takaichi’s hawkish and nationalistic views.

    Their last-minute deal came after the Liberal Democrats lost its longtime partner, the Buddhist-backed Komeito, which has a more dovish and centrist stance. The breakup threatened a change of power for the LDP, which has governed Japan almost uninterrupted for decades.

    Later in the day, Takaichi, 64, will present a Cabinet with a number of allies of LDP’s most powerful kingmaker, Taro Aso, and others who backed her in the party leadership vote.

    JIP will not hold ministerial posts in Takaichi’s Cabinet until his party is confident about its partnership with the LDP, Yoshimura said.

    Takaichi is running on deadline — a major policy speech later this week, talks with U.S. President Donald Trump and regional summits. She needs to quickly tackle rising prices and compile economy-boosting measures by late December to address public frustration.

    While she is the first woman serving as Japan’s prime minister, she is in no rush to promote gender equality or diversity.

    Takaichi is among Japanese politicians who have stonewalled measures for women’s advancement. Takaichi supports the imperial family’s male-only succession and opposes same-sex marriage and allowing separate surnames for married couples.

    A protege of assassinated former Prime Minister Shinzo Abe, Takaichi is expected to emulate his policies including stronger military and economy, as well as revising Japan’s pacifist constitution. With a potentially weak grip on power, it’s unknown how much Takaichi would be able to achieve.

    When Komeito left the governing coalition, it cited the LDP’s lax response to slush fund scandals that led to their consecutive election defeats.

    The centrist party also raised concern about Takaichi’s revisionist view of Japan’s wartime past and her regular prayers at Yasukuni Shrine despite protests from Beijing and Seoul that see the visits as lack of remorse about Japanese aggression, as well as her recent xenophobic remarks.

    Takaichi has toned down her hawkish rhetorics. On Friday, she sent a religious ornament instead of going to Yasukuni.

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