Japanese officials have warned defence contractors of deep cuts to expected orders as fiscal constraints threaten to scale back a military buildup that Prime Minister Sanae Takaichi's government says is needed to counter China, four people familiar with the matter said, Reuters reports.
Finance Ministry officials last week proposed spending between 50 trillion and 60 trillion yen ($313 billion to $376 billion) on defence over the five years starting in April 2027, the people familiar with the proposal told Reuters.
While more than the 43 trillion yen allocation in the current five-year plan, it falls well short of the 80 trillion yen budget that some defence officials and ruling Liberal Democratic Party lawmakers had assumed and used in negotiations with contractors.
The lower proposed spending could mean cuts of up to half in planned purchases of some missiles and aircraft from domestic and overseas suppliers, including US-built F-35 stealth fighters, the people said, speaking on condition of anonymity because they were not authorised to speak to the media about the matter.
Japan's biggest defence contractors include Mitsubishi Heavy Industries (MHI) <7011.T>, Mitsubishi Electric Corp (MELCO) <6503.T> and Kawasaki Heavy Industries (KHI) <7012.T>. MHI and MELCO declined to comment, while KHI did not immediately respond to a request for comment.
"The advisory panel on security and defence has not yet discussed matters at that level of detail either, so I don’t think we are at a stage where I should comment," Finance Minister SatsukiKatayama told reporters when asked about the spending proposal.
"Nothing has been decided on the size of the next defence buildup plan. Our position is to determine what Japan needs for its defence and build up the budget accordingly," a Defence Ministry spokesperson said
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