Japan weighs counting AI, satellites in 3.5% defense goal

The review comes as Tokyo balances U.S. calls for more defense spending against fiscal constraints. Japan is already dealing with record budget demands: total requests for the next fiscal year have exceeded ¥143 trillion ($910 billion). Market pressure has forced Prime Minister Sanae Takaichi to pledge to keep issuance of deficit-covering bonds at around ¥40 trillion, after her tax-cut and big spending plans jolted bond markets over fears of adding to Japan's debt pile, the largest among the world's major economies. Broadening the definition of security-related expenditures could help Japan move toward the 3.5% of GDP level without a proportional increase in narrowly defined military outlays, though officials cautioned that no decisions have been made. One official framed the challenge simply: “The key issue is how much can be included as defense-related spending.” Chief Cabinet Secretary Minoru Kihara added that “the important thing is not the amount of money itself but the substance of our defense capabilities,” suggesting the debate may hinge on how capabilities are defined and measured.