Escalation of US-China Military Drills in

📡 THE SIGNAL — What Happened

Why it matters: The simultaneous large-scale military exercises by both the US and China in the South China Sea are generating the highest level of military tension since the Cold War, placing Japan on the front lines geographically and in terms of alliances. This structural change could mark a turning point not only for the defense budget but for Japan's post-war security system itself.

• Military — From January to March 2026, the U.S. Navy deployed two carrier strike groups in the South China Sea, conducting "Freedom Edge," the largest exercise in a decade.
• Military — The Chinese People's Liberation Army Navy (PLAN) conducted large-scale live-fire exercises across the entire South China Sea during the same period, deploying over 70 vessels around the Paracel and Spratly Islands.
• Diplomacy — The Philippines and Vietnam lodged formal diplomatic protests against China's designation of exercise areas.
• Japan — The Japanese government began considering additional defense spending in the FY2026 supplementary budget. Discussions within the ruling party raised the idea of "2.5% of GDP."
• Alliance — Leaders of the Quadrilateral Security Dialogue (QUAD) held an emergency online meeting in February 2026 and issued a joint statement on freedom of navigation in the South China Sea.
• Economy — International trade passing through the South China Sea amounts to approximately $5.3 trillion annually, with about 80% of Japan's crude oil imports transiting this area.
• Technology — China confirmed the additional deployment of HQ-9B long-range surface-to-air missile systems on artificial islands in the Spratly Islands. Satellite imagery revealed the construction of new hangars.
• Domestic Politics — A Japanese public opinion poll showed support for "strengthening defense capabilities" exceeding 60% for the first time (62% in a February 2026 Yomiuri Shimbun survey), marking a new record high.
• Legal Framework — The Liberal Democratic Party's Security Research Commission submitted recommendations to the Prime Minister, including clarifying operational standards for "counterattack capabilities" and strengthening the defense of the Southwest Islands.
• Coast Guard — The Japan Coast Guard announced that activities by China Coast Guard vessels around the Senkaku Islands increased by 35% year-on-year from January to February 2026.
• Supply Chain — Major Japanese trading companies began formulating logistics plans for alternative routes to the Malacca Strait (via the Lombok Strait) in response to tensions in the South China Sea.
• Fiscal Policy — The initial defense budget for FY22026 is approximately 7.9 trillion yen (about 1.6% of GDP), but additional appropriations could push it over 8.5 trillion yen.

To understand the current escalation of US-China confrontation in the South China Sea, it is necessary to grasp at least three historical contexts: first, China's long-term strategy of expanding maritime claims based on its "nine-dash line" assertion; second, the evolution of the US Indo-Pacific strategy; and third, the gradual transformation of Japan's post-war security system.

China's expansion into the South China Sea dates back to the "eleven-dash line" in 1947 (later revised to the nine-dash line), but the acceleration of effective military presence began after 2013. Under the Xi Jinping administration, seven reefs in the Spratly Islands were extensively reclaimed, leading to the construction of runways, radar facilities, and missile deployments. China's complete rejection of the 2016 Hague arbitration ruling invalidating the nine-dash line effectively hollowed out the rule of law in this area. Since then, China has continued its "accumulation of faits accomplis" (salami-slicing strategy), gradually intensifying pressure around the Second Thomas Shoal in the Philippines and the Paracel Islands in Vietnam.

The US response has also changed incrementally. The Obama administration's "pivot to Asia" was largely declarative, but the frequency of Freedom of Navigation Operations (FONOPs) doubled during Trump's first term (2017-2021). The Biden administration established AUKUS (Australia-UK-US security pact) and elevated QUAD to the summit level. And the second Trump administration, from 2025 onwards, further sharpened its "peace through strength" approach towards China, raising its military presence in the South China Sea to the highest level since the Cold War. Crucially, this military escalation is proceeding in parallel with economic decoupling between the US and China (semiconductor regulations, restrictions on investment in China, tariff increases). Economic interdependence is less able to function as a safety valve, and mechanisms to curb the risk of military conflict are weakening.

The transformation of Japan's security system needs to be viewed over a longer span. Article 9 of the 1947 Japanese Constitution renounced war and prohibited the maintenance of war potential, but the Korean War in 1950 prompted the establishment of the National Police Reserve (later the Self-Defense Forces). Throughout the Cold War, Japan secured its security through a combination of "exclusive defense-oriented policy" and the Japan-US Security Treaty, but this framework has been gradually expanded since the Cold War. With the 1992 PKO Cooperation Law, the 1999 Situations in Areas Surrounding Japan Law, and the 2015 Peace and Security Legislation (allowing limited exercise of collective self-defense), the scope of what Japan "can do" has broadened at each stage.

The three security documents — the "National Security Strategy," "National Defense Strategy," and "Defense Buildup Program" — approved by the Kishida administration in December 2022, were considered the biggest turning point in Japan's post-war defense policy. They explicitly stated the possession of "counterattack capabilities" (enemy base attack capabilities) and outlined a policy to double defense spending to 2% of GDP. However, as of 2026, the implementation of this plan is lagging behind initial expectations due to budgetary constraints and domestic political resistance. The target year for achieving 2% of GDP was FY2027, but it currently remains around 1.6%.

In this context, the intensification of US-China military exercises in the South China Sea in early 2026 could become a decisive "external pressure" for Japan. Historically, major shifts in Japan's security policy have always been triggered by external shocks (such as the Korean War, Gulf War, North Korean missile launches, and Chinese activities around the Senkaku Islands). The current tensions in the South China Sea are also interpreted as a rehearsal for a Taiwan contingency, and Japan's perception of it as "its own problem" is higher than in any previous crisis. If a Taiwan contingency materializes, the use of US bases in Japan would be unavoidable, automatically making Japan a party to the conflict. This recognition is fundamentally changing domestic defense policy discussions.

Furthermore, and more importantly, this military tension is directly linked to energy security. The majority of Japan's energy imports pass through the South China Sea, and instability in this region directly threatens the lifeline of the Japanese economy. Just as the 1973 oil crisis fundamentally changed Japan's energy policy, the materialization of South China Sea risks could redefine Japan's energy procurement strategy and the nature of the military force required to protect it.

The delta: The unprecedented simultaneous US-China military exercises in the South China Sea are forcing Japan's security policy to shift from the "planning stage" to the "implementation stage." Discussions on strengthening defense capabilities, which had been gradual until now, are reaching a qualitative turning point in the form of concrete budgetary measures and accelerated equipment procurement, with an eye towards exceeding 2% of GDP.