Defense budget of Japan Even during the Cold War arms race of the 1980s , the " Defense budget " was accorded a relatively low priority in Japan . According to Japanese security policy , maintaining a military establishment is only one method — and by no means the best method — to achieve national security . Diplomacy , economic aid and development , and a close relationship with the United States under the terms of the 1960 security treaty are all considered more important . For FY 1986 through FY 1990 , defense ' s share of the general budget was around 6 . 5 % , compared with approximately 28 % for the United States . In 1987 Japan ranked sixth in the world in total defense expenditures behind the Soviet Union , the United States , France , the Federal Republic of Germany ( West Germany ) , and Britain . By 1989 it ranked third after the United States and the Soviet Union , mainly because of the increased value of the yen . In FY 1991 , defense accounted for 6 . 2 % of the budget . According to the Stockholm International Peace Research Institute , Japan was ranked fourth in world in 2004 - 2005 , spending $ 42 . 1 billion ; according to The World Factbook , CIA , Japan was fifth , spending $ 44 . 7 billion ( the ranking is different because of the CIA ' s radically higher estimate of spending by the People ' s Republic of China ) . In addition to annual budgets , the Defense Agency prepared a series of cabinet - approved buildup plans beginning in 1957 , which set goals for specific task capabilities and established procurement targets to achieve them . Under the first three plans ( for 1958 - 60 , 1962 – 66 , and 1967 – 71 ) , funding priorities were set to establish the ability to counter limited aggression . Economic difficulties following the 1973 oil crisis , however , caused major problems in achieving the Fourth Defense Buildup Plan ( 1972 – 76 ) , and forced funding to be cut , raising questions about the basic concepts underlying defense policies . In 1976 the government recognized that substantial increases in spending , personnel , and bases would be virtually impossible . Instead , a " standard defense concept " was suggested , one stressing qualitative improvements in the Self - Defense Forces , rather than quantitative ones . It was decided that defense spending would focus on achieving a basic level of defense as set forth in the 1976 National Defense Program Outline . Thereafter , the government ceased to offer buildup plans that alarmed the public by their seemingly open - ended nature and switched to reliance on single fiscal year formulas that offered explicit , attainable goals . Defense spending increased slightly during the late 1970s , and in the 1980s only the defense and Official Development Assistance budgets were allowed to increase in real terms . In 1985 the Defense Agency developed the Mid - Term Defense Estimate objectives for FY 1986 through FY 1990 , to improve SDF front - line equipment and upgrade logistic support systems . For the GSDF , these measures included the purchase of advanced weapons and equipment to improve antitank , artillery , ground - to - sea firepower , and mobile capabilities . For the MSDF , the focus was on upgrading antisubmarine capabilities , with the purchase of new destroyer escort s equipped with the Aegis system and SH - 60J antisubmarine helicopters , and on improving antimine warfare and air defense systems . ASDF funds were concentrated on the purchase of fighter aircraft and rescue helicopters . The entire cost of the Mid - Term Defense Estimate for FY 1986 through FY 1990 was projected at approximately ¥18 . 4 trillion ( approximately US $ 83 . 2 billion , at the 1985 exchange rate ) . In FY 1989 , the ¥3 . 9 trillion defense budget accounted for 6 . 49 % of the total budget , or 1 . 006 % of GNP . In addition to the Defense Agency itself , the defense budget supported the Defense Facilities Administration Agency and the Security Council . Defense Agency funding covered the GSDF , the MSDF , the ASDF , the internal bureaus , the Joint Staff Council , the National Defense Academy , the National Defense Medical College , the National Institute for Defense Studies , the Technical Research and Development Institute , and the Central Procurement Office . The FY 1990 defense budget , at 0 . 997 % of the forecast GNP , dipped below the 1 % level for the first time since it was reached in 1987 . But the more than ¥4 . 1 trillion budget still marked a 6 . 1 % increase over the FY 1989 defense budget and provided virtually all of the ¥104 billion requested for research and development , including substantial funds for guided - missile and communications technologies . Although some ¥34 . 6 billion was authorized over several years for joint Japan - United States research and development of the experimental FSX fighter aircraft , disputes over this project were believed to have convinced the Defense Agency to strengthen the capability of the domestic arms industry and increase its share of SDF contracts . After originally being cut , funds were also restored for thirty advanced model tanks and the last Aegis multiple - targeting - equipped destroyer escort needed to complete the Mid - Term Defense Estimate . The 6 . 1 % defense increase was accompanied by an even larger ( 8 . 2 % ) increase in Official Development Assistance funding . The defense budget continued to grow in real terms in the early 1990s to ¥4 . 38 trillion in 1991 and ¥4 . 55 trillion in 1992 but remained less than 1 % of GNP . Japanese officials resist United States pressure to agree formally that Japan will support more of the cost of maintaining United States troops , claiming that such a move will require revision of agreements between the two nations . But in FY 1989 , the Japanese government contributed US $ 2 . 4 billion — roughly 40 % — of the total cost . The contribution slated for FY 1990 was increased to US $ 2 . 8 billion — nearly 10 % of the total defense budget — and by the end of FY 1990 the Japanese government expected to assume all expenses for utilities and building maintenance costs for United States troops stationed in Japan . According to the Ministry of Defense of Japan , the 2008 defense budget was ¥4 . 74 trillion , down by 0 . 8 % from the ¥4 . 78 trillion recorded in 2007 . This slight decline came despite attempts by the governing LDP to enhance the status of national defense by upgrading the Defense Agency to the Ministry of Defense , effective January 9 , 2007 .