Japan doubled defense spending to counter China. Now it wants AI, underwater attack drones and government-owned weapons factories

Japan is asking for 8.9 trillion yen, or $55.6 billion, for defense in the coming fiscal year, according to a Ministry of Defense request released Monday. That’s only a slight step up from the 8.8 trillion yen sought for this fiscal year, but the real number is still ahead of it. More details will come later, after Prime Minister Sanae Takaichi’s government signs off on a new security strategy meant to deepen Japan’s counterstrike ability.

The direction is clear enough already. Japan has spent the past few years raising defense spending to about 2% of GDP under its five-year strategy from 2022, part of a broader effort to respond to China’s growing assertiveness. Beijing calls that buildup “new militarism.” Tokyo, for its part, is framing the next phase as an adaptation to modern war, pointing to Ukraine’s use of drones as the model for cheaper, more flexible force.

That means attack drones, long-range cruise missiles and interceptors, all tied together more tightly. The ministry says it wants domestic development and mass production of low-cost uncrewed weapons to cut expenses, reduce casualties and build a more efficient air defense network. It also plans to pair attack drones with long-range missiles for counterstrikes that cost less than firing pricier systems every time.

There’s a deeper manpower problem underneath the technology push. Japan’s population is aging and shrinking, and officials say uncrewed weapons could help make up for fewer military personnel. The ministry is also seeking funding to buy unmanned attack drones that can be launched from above or under water starting in the fiscal year beginning in April 2027. And it wants to develop hypersonic missiles that can be launched from submarines.

AI is now part of the same overhaul. The ministry wants an integrated AI platform for command and control to speed up decisions, from battlefield assessment to target selection. It is weighing foreign systems, including U.S. technology, alongside domestic AI, or some mix of the two. It also wants a next-generation “AI orchestrator” that can manage multiple AI systems, plus a Defense Ministry cloud for sensitive data and emergency communications.

The industrial side matters just as much. Japan wants a state-owned, contractor-operated setup that would let the government own factories while private firms handle manufacturing, reducing the risk of supply shortages if suppliers walk away. It is also seeking support for defense-related research, development and restructuring. That push comes as major suppliers like Mitsubishi Heavy Industries, Kawasaki Heavy Industries and IHI Corp. have seen profits rise, while many other companies have left the sector over weak profits, uncertainty and reputational worries around making weapons.