Tokyo Report | Security | East Asia

Japan Plans New Defense Industrial Strategy to Prepare for Prolonged Conflicts

Tokyo seeks to boost production capacity for military emergencies and expand defense exports amid growing regional threats.

Japanese Defense Minister Koizumi Shinjiro and Economy, Trade and Industry Minister Akazawa Ryosei at a meeting with industry representatives on Nov. 4, 2026, to discuss the formulation of Japan’s new Defense Industrial Base Strategy.

Japan is preparing to adopt a new Defense Industrial Base Strategy by the end of 2026, broadening its defense buildup to address a critical question: whether domestic industry can sustain the Self-Defense Forces through a prolonged conflict.

The initiative comes as Tokyo confronts mounting security challenges involving China, North Korea, and Russia. Russia’s war against Ukraine has demonstrated how quickly sustained fighting consumes ammunition and military equipment.

On November 4, Defense Minister Koizumi Shinjiro and Economy, Trade, and Industry Minister Akazawa Ryosei met at the Ministry of Defense with representatives of five major defense contractors, including Mitsubishi Heavy Industries and Kawasaki Heavy Industries, alongside Japan’s leading business organizations. Koizumi called for maintaining reserve production capacity for military emergencies and fundamentally rethinking Japan’s defense equipment policies.

The emerging strategy has three priorities: sustaining defense capabilities, adapting to new forms of warfare involving drones and artificial intelligence, and creating a virtuous cycle between defense investment and economic growth.

A central proposal is a government-backed organization linking defense manufacturers with the state. Expected to take the form of an incorporated administrative agency, it would support domestic production, research and development, defense equipment transfers abroad, and startups developing dual-use technologies. The government aims to submit legislation during the ordinary Diet session in 2027, with the new organization potentially beginning operations in fiscal 2027.

Cooperation between the Ministry of Defense and the Ministry of Economy, Trade, and Industry (METI) is significant. Japan’s defense procurement has traditionally centered on established prime contractors. METI’s industrial policy experience could help bring smaller suppliers and civilian technology companies into defense production.

Akazawa emphasized the importance of expanding industrial supply chains and utilizing civilian technologies for defense purposes.

Koizumi has highlighted the government-owned, contractor-operated (GOCO) model, under which the state owns manufacturing facilities while private companies operate them. Such arrangements could preserve production capacity that companies would struggle to maintain commercially during peacetime.

This is not an entirely new legal mechanism. Japan’s 2023 defense production legislation already allows the government to acquire manufacturing facilities and entrust their operation to contractors when other measures cannot secure supplies. The forthcoming strategy could give this mechanism a broader role in........

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