The Japanese government is responding to weeks of high tensions with China with record spending on national defence.

The draft budget for the 2026 fiscal year, approved by the Cabinet on Friday, provides for a 3.5 per cent rise in military expenditure to around 9 trillion yen (58 billion dollars).

Around 100 billion yen is earmarked for the development of a system called “Shield” to protect Japan’s long coastline and remote islands against ships, submarines and drones.

The military build-up is taking place against a backdrop of heightened tensions with neighbouring China following statements made by Prime Minister Sanae Takaichi about Taiwan in November.

Takaichi said that an attack by China on the self-governed island would pose an “existential threat” to Japan, which could lead to the exercise of its right to self-defence.

Beijing responded with sharp criticism, travel warnings, cancelled flights and an import ban on Japanese seafood.

Japan’s plan to station missiles on Yonaguni Island, just under 110 kilometres from Taiwan, also met with a heavy response.

Tokyo recently protested after Chinese military aircraft allegedly targeted Japanese fighter jets near the southern Japanese archipelago of Okinawa with special radar for target tracking. Beijing denied the accusations.

The draft budget for the fiscal year beginning April 1 totals a record 122.3 trillion yen, intended to finance rising social spending in view of the rapid ageing of Japanese society.

Despite record tax revenues, the government is set to issue further bonds to finance the national budget.

Takaichi’s aggressive spending policy has put pressure on the yen against major currencies.

The country’s national debt is already more than double annual gross domestic product (GDP).