Increased Chinese naval and aerial incursions near Japan’s southernmost islands have prompted Tokyo to accelerate defense upgrades, including a $2.3 billion allocation for base modernization on Okinawa and the deployment of advanced missile systems. The moves signal a strategic pivot in Japan’s security posture.
- 387 Chinese aircraft incursions into Japan’s ADIZ in 2024, up from 212 in 2023
- $2.3 billion allocated for Okinawa base modernization in FY2025
- 89 Chinese naval reconnaissance missions near Senkaku Islands since July 2024
- Japan’s defense budget to reach ¥6.7 trillion ($48 billion) in 2025
- 22% year-on-year increase in defense orders for Japanese contractors
- 14% rise in land values near military bases in Okinawa
Japan is intensifying military readiness on its southernmost islands as Chinese military activity in the East China Sea reaches a 15-year high, according to defense ministry data. In the past 12 months, Chinese aircraft have crossed into Japan’s Air Defense Identification Zone (ADIZ) 387 times—up from 212 in 2023—primarily near Okinawa and the Senkaku Islands (known as Diaoyu in China). Naval vessels from the People’s Liberation Army Navy have conducted 89 reconnaissance missions near the disputed islets since July 2024, a 40% increase from the previous year. The Japanese government has responded with a multi-phase defense expansion plan, allocating ¥320 billion ($2.3 billion) in fiscal year 2025 to strengthen air and missile defenses on Okinawa, home to the largest concentration of U.S. military bases in Japan. This includes the construction of a new underground command center, the installation of 12 advanced Type 03 Surface-to-Air Missile (SAM) systems, and the expansion of runway capacity at Kadena Air Base to accommodate F-35 stealth fighters. These developments have triggered a shift in regional military dynamics. The U.S. Indo-Pacific Command has increased joint drills with Japan by 35% in 2025, including live-fire exercises involving the Aegis-equipped destroyer JS Izumo and U.S. Navy amphibious assault ships. Meanwhile, South Korea and Australia have begun coordinating defense monitoring efforts with Tokyo, signaling broader alliance-building in response to Beijing’s assertiveness. Market implications include rising defense spending across the region, with Japan’s defense budget set to reach ¥6.7 trillion ($48 billion) in 2025—its highest level since World War II. Japanese defense contractors such as Mitsubishi Heavy Industries and Kawasaki Heavy Industries have seen a 22% increase in defense-related orders year-on-year. The real estate sector near military installations in Okinawa has also experienced a 14% surge in land values due to anticipated infrastructure growth.