TOKYO—Japan’s cabinet on Thursday approved an increase in military spending for a fifth successive year—including funds for missile defense upgrades and new advanced submarines—to meet accelerating threats from North Korea and China.
The pressure on Japan has risen to increase military spending over the past few years as China has made territorial challenges to Japanese-administered islands and North Korea has stepped up missile- and nuclear-weapons development. Four North Korean missiles landed close to the northern coast of Japan this year.
“The security environment surrounding Japan is becoming ever more severe,” Defense Minister Tomomi Inada said in a press briefing this week.
Japan’s defense budget for the fiscal year beginning in April is up 1.4% to a record high ¥5.1 trillion ($44 billion) and is all but certain to gain parliamentary approval.
Even with recent increases, spending on defense in Japan has remained at around 1% of gross domestic product for more than two decades, one of the lowest levels among major global powers. In comparison, China spends nearly 2% of its GDP on defense and more than five times the dollar amount compared with Japan, according to data compiled by the Stockholm International Peace Research Institute.
The U.S. is the biggest international spender on defense, at about 3% of GDP, or nearly $600 billion in 2015.
Japan’s military spending became an issue in during the U.S. presidential election campaign when Donald Trump called for U.S. allies to pay more for American military support. The U.S. has about 54,000 military personnel stationed in Japan and is required to help defend the country under a bilateral defense treaty.
Increases in military spending are controversial in Japan because of the country’s pacifist constitution, which was imposed by the U.S. after World War II, but is strongly supported by many Japanese.
Under President Barack Obama, the U.S. has pushed Japan to play a more active role in regional defense, and Parliament loosened restrictions on Japan’s so-called Self-Defense Forces at the urging of Prime Minister Shinzo Abe.
The latest defense budget includes about ¥65 billion for missile defense measures, including funds to complete the co-development with the U.S. of a ship-based missile interception system.
Earlier this year, North Korea held its first successful tests of missiles fired from a mobile carrier and a submarine, which are harder to detect before launch. North Korea has said it would target U.S. bases in Asia if faced with attack, including installations on the Japanese island of Okinawa.
Among dozens of test-firings of missiles by Pyongyang this year, four landed about 240 kilometers from the coast of northern Japan, the closest since North Korean missiles flew over Japan in 1998 and 2009.
Japan is also studying other missile defense upgrades, including the possible introduction of an advanced U.S. missile shield known as Terminal High-Altitude Area Defense. South Korea plans to deploy a Thaad battery next year, a move strongly opposed by China because its powerful radar system extends into Chinese territory.
The Japanese defense budget also includes ¥73 billion for a new type of submarine with improved sonar, in an escalation of maritime defense as China challenges Tokyo’s sovereignty over a group of uninhabited islands in the East China Sea. In June, a Chinese warship entered waters around the disputed islands for the first time.
The addition of new submarines will help check China’s advances in the area, said retired Japanese Vice Adm. Toshiyuki Ito.
“Japan’s grand strategy is deterrence against China. It seeks to constantly show China of the high costs of missteps in order to prevent war,” said Mr. Ito, now a professor at the Kanazawa Institute of Technology.
Japan currently has 17 diesel-electric submarines and plans to increase the fleet to 22 by around 2021. China’s submarine fleet consists of around 60 vessels, including nuclear-powered craft that can travel very long distances at high speeds.
Japan also plans to add eight new coast guard ships to a 14-ship fleet to defend the East China Sea islands.
In addition to new hardware, the budget sharply increases defense research to ¥11 billion from ¥600 million yen in the current fiscal year. Last year, Mr. Abe called on scientists to help boost Japan’s defenses, which was opposed by some academics.
Write to Alastair Gale at email@example.com and Chieko Tsuneoka at chieko.Tsuneoka@dowjones.com