For much of the post-war era, Japan treated defence as an unavoidable cost of national security. Today, Tokyo is presenting it as something altogether different: a catalyst for economic renewal.

Japan’s latest defence white paper marks an important shift in both tone and ambition. Rather than focusing solely on military threats posed by China, North Korea and Russia, the government argues that expanding defence production can stimulate innovation, strengthen manufacturing, encourage start-ups and create highly skilled employment. It is an attempt to transform public perceptions of military expenditure from a fiscal burden into an investment in national prosperity.

The messaging reflects a broader strategic recalibration under Prime Minister Sanae Takaichi. As Japan commits itself to spending around 2 per cent of GDP on defence—a level once regarded as politically unthinkable—the government recognises that sustaining public support will require more than appeals to regional security. Voters increasingly want to understand what they receive in return for record military budgets. That answer, according to Tokyo, lies in industrial policy.

For decades Japan’s defence manufacturers occupied an unusual position. Companies such as Mitsubishi Heavy Industries, Kawasaki Heavy Industries and IHI produced sophisticated military equipment, but defence represented only a modest share of their overall revenues. Export restrictions, limited production runs and relatively low domestic procurement constrained economies of scale, leaving much of the sector technologically capable but commercially underdeveloped. The new strategy seeks to reverse that dynamic.

Officials increasingly speak of defence technologies in the same language previously reserved for semiconductors, artificial intelligence and advanced manufacturing. Military research is expected to generate commercial innovations, while civilian technology companies are encouraged to participate in defence procurement through dual-use applications. Start-ups developing autonomous systems, robotics and artificial intelligence are expected to play a far larger role than in previous decades.

The inspiration is hardly unique to Japan.

The United States has long benefited from military-funded innovation that later transformed civilian industries, from satellite navigation to the internet. More recently, European governments have increasingly justified defence spending as an industrial policy that supports employment, advanced engineering and technological sovereignty. Japan is now adapting that argument to its own economic circumstances. Those circumstances are pressing.

After years of sluggish growth, an ageing population and declining industrial competitiveness, Tokyo faces mounting pressure to identify new sources of productivity. Traditional export champions remain globally competitive, but China has emerged as a formidable rival across many advanced manufacturing sectors. Defence production offers an area where Japan retains significant engineering expertise and where government demand can provide long-term investment certainty.

The strategic backdrop also leaves little room for hesitation.

China’s expanding military presence around Taiwan and in the East China Sea remains Tokyo’s principal security concern. Joint Chinese and Russian military activities near Japanese territory, alongside North Korea’s continuing missile development, have fundamentally altered Japan’s threat assessment. The latest white paper again identifies Beijing as Japan’s foremost strategic challenge while highlighting the growing importance of drones, autonomous systems and long-range precision weapons.

Yet the economic narrative carries risks. Japan already possesses one of the developed world’s heaviest public debt burdens. Financing sustained defence expansion without undermining fiscal credibility remains a formidable challenge. Although the government has approved record budgets and additional spending to cushion households from higher energy prices, questions persist over how future military investment will be funded over the coming decade.

There is also no guarantee that defence investment automatically produces wider economic gains.

Military industries tend to be capital intensive, highly specialised and dependent upon government contracts. Without sufficient export opportunities or successful commercial spin-offs, defence spending risks becoming another fiscal commitment rather than a genuine engine of productivity.

Japan’s policymakers appear acutely aware of this dilemma. Hence the emphasis on integrating civilian technology firms, encouraging venture capital participation and developing products with both military and commercial applications. The objective is less about expanding traditional arms manufacturing than about embedding defence innovation throughout the broader economy.

Symbolism matters too. Perhaps the clearest illustration of Tokyo’s changing communications strategy is the white paper itself. Rather than employing conventional military imagery, its cover depicts an optimistic anime-style family set against a futuristic urban landscape—a visual attempt to present national security as compatible with everyday prosperity rather than militarisation.

Whether that message resonates remains uncertain as Japan’s post-war pacifist identity runs deep, and many voters remain uncomfortable with the scale and pace of rearmament. Nevertheless, the convergence of deteriorating regional security and renewed industrial competition is steadily reshaping political assumptions that once seemed immutable.

Tokyo is no longer arguing simply that Japan must become stronger to survive in an increasingly dangerous neighbourhood. It is making the more ambitious claim that strategic security and economic competitiveness have become inseparable. If defence spending succeeds in revitalising manufacturing, accelerating technological innovation and strengthening supply chains, Japan may provide a model other advanced economies seek to emulate.

If not, it risks discovering that military expenditure alone cannot substitute for the broader structural reforms its economy still requires.