China Worries Lead Japan To Boost Defense Spending

Japan has been a highly pacifistic nation for almost seven decades since the end of the Second World War. The country’s post-war constitution mandated that Japanese military forces must only be used for self-defense, and that forces cannot travel abroad for military missions.

That said, the ongoing conflicts between Japan and China over the last few years and the generally increasing military tensions in the South China Sea region and elsewhere have led Japan to reconsider the role of its military. This has resulted in the introduction of legal changes making it possible for Japanese forces to fight abroad and to short and longer-term plans to expand the Japanese military.

Exclusive: York Capital to wind down European funds, spin out Asian funds

Jeffrey Aronson Crossroads CapitalYork Capital Management has decided to focus on longer-duration assets like private equity, private debt and collateralized loan obligations. The firm also plans to wind down its European hedge funds and spin out its Asian fund. Q3 2020 hedge fund letters, conferences and more York announces structural and operational changes York Chairman and CEO Jamie Read More

Japanese Defense Ministry seeking expanded $42 billion budget for next year

The Japanese ministry made a 5.1 trillion yen ($42 billion) budget request on Monday for the next fiscal year, up 2.2% from this year. This is the fourth consecutive increase in the military budget under PM Shinzo Abe, who took over in December 2012 and reversed a decade of defense budget cuts.

The government argues that Japan needs to beef up its military given China’s growing assertiveness in the region and the growing number of global terrorist attacks. The Japanese parliament will likely approve several controversial bills that permit the expansion of Japan’s military role within a few weeks.

The Japanese defense budget increase calls for the purchase of new equipment, including a top-of-the-line Aegis radar-equipped destroyer, 17 surveillance helicopters, six brand new F-35 fighters and three Global Hawk drones. The budget also calls for building a Soryu-class submarine to improve long-distance surveillance capabilities.

Funds to cover the expenses of planned new troop deployments on the two southern islands, Amami Oshima and Miyako, are earmarked in next year’s defense budget.

Of note, the defense budget also includes funds for improving information gathering by sending intelligence officials to the new locations of Jordan, United Arab Emirates and Mongolia.

Recent publication of “Defense of Japan” white paper

As reported by ValueWalk last month, in its recent white paper titled the Defense of Japan, Japan has finally taken off the gloves and clearly identified China as a threat to Japan’s security. China has been very aggressive in its military activities and territorial claims in the South China Sea and near Japan, especially in the Senkaku Islands.

In white papers published in previous years, Japan has noted “concern” regarding the Chinese military, but did not explicitly call China a threat. The most recent white paper, however, is no longer so diplomatic about China and certainly more accurately represents the reality of the security situation with China. The publication of the white paper comes just days after approval by the lower house of Japan’s parliament to move ahead with new laws permitting the Japanese military to have an expanded role outside of the country.

After the approval of the new white paper by the government, Defense Minister General Nakatani commented at a press conference:  “Coupled with a lack of transparency in terms of military and security affairs, China’s military development is of concern to the regional and international community, including our country.” He continued to note, “our country needs to observe it closely”.