Jan. 11 (Bloomberg) -- Japanese Prime Minister Shinzo Abe’s plan to raise defense spending in response to China’s increasingly aggressive claims to disputed islands is running into budgetary restrictions.
In his first major policy initiative since taking office on Dec. 26, Abe today announced a 10.3 trillion yen ($116 billion) economic stimulus package. While defense figures weren’t detailed in the initial release, security outlays are part of 800 billion yen that includes spending on health care and child welfare, or less than 8 percent of the total.
Abe has pledged to reverse a decade of defense budget cuts, citing repeated Chinese incursions into Japanese-controlled waters. At the same time, he is hampered by the world’s largest debt, a pacifist constitution, and an informal spending limit of 1 percent of gross domestic product, in contrast to China’s annual double-digit increases in military outlays.
“Japan realizes that it cannot hope to match China, but it needs to do something to improve its capabilities,” said Thomas Berger, Associate Professor of International Relations at Boston University, in e-mailed comments. “Unpopular as it is, Japan probably should be spending a lot more.”
The Defense Ministry requested 212 billion yen as part of Abe’s stimulus, saying the money would be used for additional PAC-3 missile interceptors and upgrades for F-15 fighter planes. The budget for this year is 4.6 trillion yen.
Japan’s 2011 defense spending was the world’s sixth largest at $59.3 billion, according to the Stockholm International Peace Research Institute. China came in second behind the U.S. at $143 billion, and as a percentage of GDP spent 2 percent, compared with Japan’s 1 percent.
Military outlays account for about 5 percent of Japan’s budget, while almost a quarter goes to servicing debt and almost 30 percent goes to social security spending in the world’s most rapidly-aging society, according to Finance Ministry data.
Japan deployed eight F-15 fighters in response to an incursion last month by a Chinese plane into Japanese-controlled airspace around the East China Sea islands, known as Senkaku in Japanese and Diaoyu in Chinese. Chinese government ships have repeatedly entered Japanese waters in recent months and been warned off by the Coast Guard, and Japan summoned China’s ambassador to Tokyo to protest an incursion this week.
“China and Japan may stand at a turning point that leads to confrontation,” China’s state-run Global Times newspaper said in an editorial today. “The resentment toward each other has come to the highest level since World War II.”
The dispute over the uninhabited islands was reignited in September when the Japanese government bought three of them from a private Japanese landowner. The move sparking violent demonstrations outside Japanese restaurants and car dealerships in China, and damaged a $340 billion trade relationship between Asia’s two biggest economies.
In a press conference today, Abe said it was “wrong” for China to allow Japanese businesses to be damaged for political reasons. He added he wanted to restore a “mutually beneficial strategic partnership” with China while reiterating his stance on the islands’ sovereignty.
“There is not the slightest change to our resolve to defend the Senkaku Islands and our territorial waters,” Abe told reporters. “There is no room for negotiation on this.”
The Defense Ministry is also requesting the budget for the fiscal year starting in April be increased by about 2.6 percent to 4.76 trillion yen, to allow it to buy more patrol aircraft, as well as a destroyer and a submarine. The increase would take spending back to about 2007 levels.
The Coast Guard will also request funds to build six ships and plans to form a dedicated unit of 400 personnel to patrol the islands, the Asahi newspaper said today. A spokesman for the Coast Guard said plans were still under consideration.
Japan, whose U.S.-written pacifist constitution restricts the activities of its armed forces, relies on its alliance with the U.S. as the mainstay of its security policy. Abe has said he wants to strengthen that relationship to bolster Japan’s position as the standoff with China continues.
He has also called for revising the constitution, which renounces war as a right of the nation. Japan maintains a Self-Defense Force over the objections of pacifist groups.
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