Why a pacifist Japan seems to be doubling down on arms exports
Japan, renowned for its pacifist constitution, is now setting its sights on the global arms exports market.
Defense Minister Gen Nakatani earlier this month told Nikkei that he wanted to promote Japan's defense exports, signaling a clear shift in the country's arms policy, which has so far been largely restricted to catering to the Japan Self-Defense Forces, or JSDF.
Prime Minister Shigeru Ishiba has also signaled sharper focus on the defense sector and became the first sitting prime minister to attend DSEI Japan, the country's largest defense exhibition.
While the shift in stance comes at a time when global defense spending has been on the rise, Japan's motivations are linked more to its security concerns than profiting from the surge in global arms demand, experts told CNBC.
The biggest reason behind this shift is to deepen ties and increase interoperability of Japanese forces with allies and partners, said Rintaro Inoue, research associate at the Institute of Geoeconomics, a Tokyo-based think tank.
By exporting its arms abroad, a country is able to improve interoperability with the purchasing parties by standardizing maintenance processes for hardware and creating joint training opportunities.
"This rationale has been the main pillar after Prime Minister [Shinzo] Abe created the concept of 'proactive contribution to peace' in 2013 which aims to deepen cooperation with other Western countries in this area, and especially in security fields," he said.
When the late Abe was in office, he led efforts to revise the interpretation of Article 9 of Japan's constitution to allow the JSDF to more actively contribute to international peacekeeping efforts and defend allies.
Japan also wants to develop its defense industrial base, which had been in "very poor conditions" before the country moved to increase its defense budget in 2022, Inoue said. Exports will allow it to achieve the economies of scale needed to make domestic production more viable. Instead of investing in Japan's domestic defense base, the country has largely purchased weapons from the U.S., such as the F-35 fighter jets and SPY-7 radar systems. "This created a severe situation among the defense industry based in Japan, and several companies have left the industry, especially in the supply chain," Inoue said. In 2023, more than 100 companies were reported to have left the defense industry in the past 20 years.
Naoko Aoki, political scientist at U.S.-based policy think tank RAND, said that Japanese defense firms have traditionally operated with limited domestic demand from the JSDF. Being able to export defense items means that companies would have a bigger customer base, helping them develop production capacities, lower costs and have more flexibility.
"Even if the JSDF needed more of, for example munitions, these companies would not be eager to invest in new facilities to produce more of them, if they think that is a one-time request. If there were more stable demand at a higher level, however, they can justify the investment," Aoki said.
As of 2024, Japan's arms exports stood at 21 million TIV — just 0.1% of global arms exports — according to the Stockholm International Peace Research Institute. The TIV or trend-indicator value is a measure of the volume of international transfers of major conventional weapons.
In comparison, neighboring South Korea exported 936 million TIV in 2024, with 3.3% of global arms exports, while TIV for China, the largest Asian arms exporter from 2020-2024 stood at 1.13 billion, accounting for 3.9% of global shipments.
Defense is attractive as a growth sector, according to veteran investor David Roche, strategist at Quantum Strategy. "Demand will exceed supply for a decade,he said. So, building domestic capacity is of paramount importance.
Roche said that if nations such as Japan stay dependent on the U.S., the Trump administration's more transactional approach will oblige them to pay for much more of their own defense, or defense equipment supplied by the U.S.Roche pointed to U.S. Defense Secretary Pete Hegseth's speech during the 2025 Shangri-La Dialogue, earlier this month: "We ask — and indeed, we insist — that our allies and partners do their part on defense ... NATO members are pledging to spend 5% of their GDP on defense, even Germany."
"So it doesn't make sense for countries in Europe to do that while key allies in Asia spend less on defense in the face of an even more formidable threat, not to mention North Korea," Hegseth added.
"If they distrust the U.S. to honor its treaty engagements, then individual nations must ensure their own security and spend a lot of money doing so," Roche said.
Japan in 1967 adopted "Three Principles on Arms Exports" that restricted arms exports, and later expanded those principles to a practically impose an across-the-board ban on arms exports, except for transfers of military technologies to the U.S.
The country relaxed this stance under Abe, with former Prime Minister Fumio Kishida easing the curbs further in 2023.
The most recent changes allow defense equipment manufactured in Japan under license from foreign defense firms, including finished products, to be exported to the licensing country and from there to third countries.
For example, Japan agreed in late 2023 to manufacture — under license — and export Patriot interceptor missiles to the U.S., whose stockpiles were depleted after supplying these missiles to Ukraine. Neighbor South Korea has seen increasing global interest in its arms industry and is striving to become a major global arms supplier. Will Japan be able to compete? Experts differ.Roche says that Japan has the knowledge, skills and technology to be a major arms supplier, but IOG's Inoue warns that Japan may face manufacturing issues due to its falling population and growing proportion of seniors.
"I think it's very difficult for Japan to once again focus into manufacturing jobs," he said.
RAND's Aoki pointed to still-strict regulations. "Japan has the technical capacity to do many things," but as export regulations remain severe, it will use exports mainly as a tool to strengthen its defense industrial base and defense relations with like-minded countries, particularly the U.S.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
an hour ago
- Bloomberg
Japan Flags Big Cut to Long-End Bond Issuance Before Risky Sale
Japan's larger-than-expected cut to super-long bond issuance has potential to ease some upward pressure on yields just before an auction this week that risks reigniting turmoil in the debt market. The move by the finance ministry may also prove fortuitous in light of the US attack on Iranian nuclear sites over the weekend. The escalating military action adds to the dangers for super-long yields via higher oil prices and inflation, even if the knee-jerk reaction Monday pulls bonds the other way as investors seek havens.
American Military News
an hour ago
- American Military News
Widespread pay cuts in China drive down consumer spending, fuel deflationary fears
This article was originally published by Radio Free Asia and is reprinted with permission. Chinese workers across industries are facing salary cuts and layoffs as mounting economic woes engulf China's public and private sectors, sources tell Radio Free Asia. That's forcing families to slash spending. It is also triggering deflationary concerns as businesses enter into desperate price wars. From Beijing's central government offices to provincial agencies across China, as well as major state-owned enterprises like investment bank China International Capital Corp (CICC), employees have faced substantial pay reductions that have reduced household budgets and fundamentally altered consumer spending patterns. 'I used to earn 6,000 yuan (or US$835) a month but now I only get 5,000 yuan (US$696), and some allowances have been removed too,' Li, an employee at a Beijing-based state-owned enterprise, told RFA. Like many others interviewed for this story, Li wanted to be identified by a single name for safety reasons. 'Some people in my wife's company have also had their salaries cut and some have received layoff notices, saying they will only work until July-end,' said Li. In Zhejiang, regarded one of China's most prosperous provinces, ordinary civil servants have had their annual salaries slashed by 50,000 to 60,000 yuan (or US$6,964-US$8,356) this year, Zheng, a resident of the province's Zhuji city, told RFA. Civil servants in more senior positions have seen deeper reductions to their annual pay of around 80,000 to 100,000 yuan (or US$11100-US$13900) and others in still higher levels by about 150,000 yuan (or US$20,890), Zheng said. 'There was already a reduction two years ago. This year's salary is reduced again,' he added. The cuts indicate the financial strain on local governments, as domestic economic challenges lead to tepid consumer demand and price pressures. That's impacting businesses' ability to pay taxes. Additionally, local governments are grappling with a decline in land transfer sales revenue amid weak property market demand. For 2025, China's provincial regions have set cautious fiscal revenue estimates, with an average growth target of 2.8% for their general public budget revenue, which is the sum of tax and non-tax revenue. That's down 1.6 percentage points from 2024's target average, as revenue generation challenges continue to weigh on local governments, economists say. For example, in Shandong, many real estate projects have been suspended for the past two years with no land sales recorded, impacting the local government's already large fiscal debt levels, said one blogger based in the northeastern coastal province, according to texts and pictures posted on X account @whyyoutouzhele, also known as 'Mr. Li is not your teacher,' who posts content on that platform to circumvent Chinese government censorship. Another Shandong resident, named Geng, told RFA, that county and township level officials in the province have had their salaries slashed by 30%, with payments frequently delayed. 'Now the county-level finances have been depleted, and the benefits for police officers have also been reduced,' Geng, a resident of Qingdao city, said. Police officers in many other regions have also seen significant cuts to their annual salaries, down to 200,000 yuan (US$27,856) this year from 300,000 yuan (US$41,784) a year ago, said a legal professional based in southeast China's Guangdong province. Employees of major Chinese state-owned commercial enterprises, such as investment bank CICC and China Development Bank, have not been spared either, with companies executing cost-cutting 'optimization measures,' including wage reductions and layoffs, amid a government campaign to cap pay ceilings at financial institutions and bring it more on par with other civil servants But an employee at CICC said the salary cuts have affected virtually all staff levels. 'Almost everyone in our building has had their salaries cut. The lowest-level employees have also had their salaries cut by 5%. I heard that the reductions for mid- and high-paid employees are even greater,' he said. According to a report from Beijing-based Caixin media group, 27 government-owned financial enterprises have begun to implement salary cuts, mainly aimed at reaching the goal of capping annual income of staff at these firms at 1 million yuan (US$139,180), as Beijing moves forward with a campaign, known as 'common prosperity' drive, to narrow income and wealth inequality. Ma, who works at a Beijing-based state-owned enterprise, said his company has already conducted two rounds of salary cuts and layoffs since 2023. 'The basic salary has shrunk, and the company has also cancelled meal and transportation subsidies,' Ma said. 'The work that used to be done by two or three people now has to be done by one person.' Another employee of a state-owned bank based in Guangdong's Dongguan city said his salary had been reduced by 30% in the past two years, with performance bonuses 'almost completely cut.' The salary reductions have sparked a sharp decline in consumer spending, creating deflationary pressures across the economy, as businesses engage in aggressive price cutting in a desperate bid to attract cash-strapped consumers. 'The price war has become the latest struggle for many small businesses,' Meng, a Shandong resident, told RFA. 'For example, the good ribs here only sell for 12 yuan (or US$1.67) a pound, and the purchase price of live pigs is only a few yuan … restaurants are desperately offering discounts to survive. This is not competition, but dragging each other down.' In Beijing, small supermarkets are 'slashing prices like crazy,' said Su, a resident of the city's Haidian District. 'I'm afraid they will all go bankrupt in a few months at this rate.' In her own home too, Su has observed major changes in spending patterns, with fewer family gatherings and less frequent restaurant meals, as household budgets tighten. Economist Wu Qinxue warned that the current situation highlights continued decline in local governments' fiscal levels and is not just a temporary belt-tightening. 'The (local) government has no money to manage people, and no one is willing to spend money,' he said. 'From salary cuts within the system to the collapse of consumption among ordinary people, the entire society is quietly forming a top-down (consumer belt-) 'tightening chain.''
Miami Herald
an hour ago
- Miami Herald
Trump's Iran strike could boost — or ruin — his troubled presidency
President Trump's decision to bomb Iran's nuclear sites is a high-stakes gamble that could either breathe new life into or irreparably damage his troubled second term in the White House. Yet for the world at large, it may well prove to be a welcome development. Before we get into why Trump's decision aligns with the consensus among the world's biggest democracies — that Iran should not be allowed to obtain nuclear weapons — let's remember that Trump's popularity was falling fast before the strike. Only 42% of Americans approve of Trump's job performance, while 54% disapprove of it, according to a large-sample Reuters-IPSOS poll conducted June 11-16. Most Americans view Trump negatively, not only on the economy, which was once his strong point, but also on immigration, according to polls. The U.S. economy has slowed dramatically since Trump took office and launched his erratic tariff wars. According to the latest World Bank projections, the U.S. economy will only grow by 1.4% this year, which would be half of its 2.8% growth last year, in part because of the uncertainty created by Trump's on-and-off threats to impose huge import taxes on foreign goods. Likewise, many Trump voters in states with large immigrant communities, like Florida, are disappointed by Trump's decision to deport hundreds of thousands of immigrants without criminal records, including more than 350,000 Venezuelan Temporary Protected Status (TPS) holders who entered the country legally. During the 2024 campaign, Republicans claimed that Trump would focus on deporting violent criminals. Before his Iran strike, Trump was also haunted by his growing image as a wavering leader. His repeated reversals of his own tariff ultimatums — first vowing to impose 145% tariffs on China, then reducing them to 30% — made him an object of mockery in European capitals and among U.S. critics. A Financial Times columnist popularized the acronym TACO — Trump Always Chickens out — to describe the U.S. president's trade strategy. Trump got visibly upset when he was asked about the TACO reference at a recent press conference. His fear of being perceived as an indecisive leader may have pushed him — after weeks of reportedly telling Israel's Prime Minister Benjamin Netanyahu he would not get dragged into the conflict — to join Israel's military offensive against Iran's nuclear sites. But if Trump's Iran gamble turns out well and Iran's theocratic dictatorship either crumbles or gives up its uranium enrichment program through diplomatic negotiations — a big if — Trump will be credited with having done something four previous presidents contemplated but ultimately failed to do. Internationally, virtually all major Western democracies agrees that Iran is a threat to Israel, and to the world. In a statement at the end of the June 16 summit of the G-7 group of Western democracies in Alberta, Canada, the leaders of the United States, the United Kingdom, France, Germany, Japan, Italy and Canada said that 'We have been consistently clear that Iran can never have a nuclear weapon.' The G-7 bloc's statement added that 'Iran is the principal source of regional instability and terror in the Middle East,' and that 'We affirm that Israel has a right to defend itself.' Days earlier, on June 12, the International Atomic Energy Agency (IAEA) for the first time in 20 years issued a statement warning that Iran was not complying with its nuclear nonproliferation agreements. Translation: Iran was enriching uranium at levels only justified to build nuclear weapons. Skeptics who don't follow Iran's political history may ask themselves why the world doesn't allow Iran to have nuclear weapons like India, Pakistan and other countries. The answer is simple: Unlike other countries, Iran has a state policy of trying to 'eliminate' a nearby sovereign country — Israel— that has been recognized by the United Nations since 1948. This is not about Western countries being against Iran's Jurassic theocracy for imprisoning women for failing to cover their heads with a hijab, or for executing gays, or any of its other abhorrent internal policies. The reason is that if we allow a country that calls for the destruction of another nation to have a nuclear bomb, it will set a precedent that makes the world even more dangerous. In Iran's case, it's not just Iranian Supreme Leader Ayatollah Ali Khamenei's crazy rhetoric, but his actions. Iran has long provided financial aid to terrorist groups like Hezbollah in Lebanon and Hamas in Gaza. Iran's proxies have carried out terrorist attacks as far away as Argentina, where Hezbollah was found responsible for the bombing that killed 85 people and wounded hundreds at the AMIA Jewish Community Center in Buenos Aires in 1994. There are many ways in which Trump's political gamble may go wrong, especially if Iran moved some of its enriched uranium into a secret location outside Fordo, or if it unifies Iranians behind their decrepit regime. But if Iran's regime falls, or agrees to a serious international nuclear monitoring agreement, Trump's faltering second term will get a second wind. Don't miss the 'Oppenheimer Presenta' TV show on Sundays at 9 pm E.T. on CNN en Español. Blog:
