Japan is considering creating a government-backed financing arm for weapons exports in a bid to strengthen its regional security ties as China’s military power grows.
As a first step, the government plans to convene an advisory panel to consider specific proposals on how to finance military sales by Japanese firms and fund defense industry cooperation abroad, Reuters reported, citing four people with knowledge of the matter.
One possibility is creating a government-backed body, similar to the Japan Bank for International Cooperation (JBIC) and the Japan International Cooperation Agency (JICA), that will provide concessional financing for military projects, the sources said.
JBIC issues its own bonds to finance energy projects. Overseen by the Finance Ministry, it also helps Japanese industrial firms expand abroad by providing loans for overseas customers to buy Japanese machinery.
JICA is the Foreign Ministry’s main conduit for dispersing much of the nation’s US$17 billion in annual overseas development aid. The agency builds schools and hospitals and finances agriculture and health projects, with Japanese engineers, nurses and other experts often involved.
The plans are likely to upset China, where memories of Japan’s wartime past run deep. Beijing has already Prime Minister Shinzo Abe’s decision in April to end a decades-old ban on arms exports.
Asked about the plans, a spokesman for Japan’s Defense Ministry said: “We are considering a number of options in regard to defense equipment, but as of yet, nothing has been decided.”
Abe dissolved parliament last week and called lower house elections for Dec. 14, which his Liberal Democratic Party and its coalition partner are expected to win, the report said.
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