According to Japanese government sources, Japan's defense budget may increase to 43 trillion yen within five years from next year.

(Reuters file photo)

[Compile Sun Yuqing/Comprehensive Report] Japanese government sources revealed that starting from the fiscal year in April next year, the Japanese government expects to allocate 40 trillion to 43 trillion yen (about 9.25 trillion to 9.95 trillion Taiwan dollars) of defense funds in five years to cope with A more assertive China threatens.

"Reuters" quoted three people familiar with the matter on the 2nd as saying that the Japanese government intends to allocate 40 to 43 trillion yen for the "Defense Force Preparedness Plan" within 5 years starting from April next year. From April 2023 to March 2023, it is more than 1.5 times the approximately 27.5 trillion yen (approximately 6.36 trillion Taiwan dollars) of the "Medium-Term Defense Preparedness Plan".

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It is understood that the Ministry of Defense originally advocated that the funding should reach 48 trillion yen, but the Ministry of Finance assessed it as 35 trillion yen. The latest figure is the result of negotiations between the two parties. Prime Minister Yasuichi Hamada will meet again this month with Prime Minister Fumio Kishida to resolve their differences.

Given that Japan is facing an increasingly assertive China, Kishida Fumio asked key cabinet members to formulate a plan on the 28th of last month to increase defense spending from the current equivalent of 1% of gross domestic product (GDP) within five years. to 2%.

The latest defense budget is Japan's latest effort to "fundamentally strengthen its defense" proposed by Kishida after taking into account the military movements of China and North Korea. The major change in security policy is expected to have an impact on the situation in East Asia.

However, the sharp increase in the defense budget has also raised concerns that Japan's crippling debt burden, which is now equivalent to twice the country's annual economic output, will continue to worsen.

Economist Hoshino Takuya, chief economist of the Economic Research Department of Japan's "Dai-ichi Life Economic Research Institute", said bluntly that spending 40 trillion yuan is not a problem. The question is whether the government can ensure that the source of funds is secure, and whether the funds can be circulated in domestic defense-related industries, so as to Support the economy.

If it spends money to buy weapons and armaments from abroad, it may lead to capital outflow and depreciation of the yen.

It is understood that in order not to disrupt the nascent economic recovery, the Japanese government will postpone the implementation of tax increases for at least one year, but this move will inevitably limit the funding channels for increasing the defense budget.

However, the Japanese side has planned to expand its financial resources by cutting spending, expanding bond issuance, and attracting tax-free income.