Bloomberg reported on August 31 that the Japanese Ministry of Economy, Trade and Industry is applying for a record budget of 7.8 trillion yen (approximately 328.2 billion yuan), in order to accelerate investments in semiconductors, artificial intelligence, and other strategic industries. However, Japan is currently facing a heavy debt burden and challenges related to difficult access to raw materials.
On August 31, the Ministry of Economy, Trade and Industry submitted a budget request for the new fiscal year starting in April 2027. It is understood that these industries are at the core of what Japan's Prime Minister Shinzo Abe refers to as the "major policy guidelines." Previously, Abe proposed a total of 370 trillion yen in public and private investment in key industries over the next 14 years.
When asked if this was the largest budget request in the history of the Ministry of Health, Nursing and Welfare, the official responsible for briefing reporters, Yuriko Tamai, stated that the ministry had not yet reviewed historical records to make a judgment. However, she pointed out that the amount requested this time was astonishingly large, far exceeding the total of the initial budget for fiscal year 2026 (3.07 trillion yen) and supplementary budgets (2.2 trillion yen), which amounted to 5.27 trillion yen.
This unusually large request also reflects changes in Japan’s budget procedures: The government allows various departments to submit proposals without setting expenditure limits in a single application, thereby reducing the government’s dependence on supplementary budgets.
In the application of 7.8 trillion yen, 6.31 trillion yen has been allocated to the “Powerful and Prosperous Japan” framework, to implement the economic revitalization plan by Yoshihide Suga. This amount includes: approximately 2 trillion yen for artificial intelligence, semiconductors, and robotics; 680 billion yen for ensuring the security of key minerals, including rare metals; 220 billion yen for enhancing the supply capacity of naphtha; and 180 billion yen for cooperation with the Ministry of Defense to strengthen national defense and military-civilian capabilities.
These areas reflect many of the problems faced by Japan: countries around the world are disputing control over key technological fields; the war in Iran has disrupted the supply of oil and petroleum products; and our country has experienced disruptions in the supply of rare earths due to Japan’s “re-militarization” and nuclear ambitions.
The applications from provinces with economies of scale will be submitted to the Finance Ministry together with applications from other provincial departments. The Finance Ministry will prepare the annual budget and determine how to fund these expenditure measures.
However, as the developed economy with the highest debt burden, the Japanese Ministry of Finance's website clearly states that Japan's debt balance has exceeded twice its GDP, making it the highest level among major developed countries. Its report "Financial Situation" predicts that the balance of general government bonds will reach 1145 trillion yen by the end of the 2026 fiscal year; by the end of the 2025 fiscal year, the total government debt had reached 1343.8 trillion yen, setting a record for the tenth consecutive year.
In addition, Governor Miyazawa also plans to reduce the food consumption tax by two years without relying on debt-financed bonds. However, a survey conducted by a Japanese research institution on August 31 showed that due to the worsening situation in the Middle East leading to rising crude oil prices, and the increasing costs of food packaging materials, Japanese companies continue to pass these costs onto the prices of their products. It is expected that there will be 4,923 types of foods with price increases in Japan in September, marking the “largest wave of price hikes this year,” approximately three times the amount seen during the same period last year.
