Japan’s ministries and agencies have closed their preliminary submissions for the fiscal-2026 budget, with general-account requests surpassing ¥122 trillion ($830 billion) for the first time. The figure, which the Finance Ministry will tally in early September, eclipses the current year’s ¥117.6 trillion record amid rising social-security costs and larger interest payments on government debt. Driving the increase is the Defense Ministry’s request for ¥8.8454 trillion, a 4.4% rise that would mark a fourth straight record. The proposal allocates ¥312.8 billion to acquire aerial, surface and underwater drones and sets aside ¥128.7 billion to build a multilayered coastal defense system dubbed “SHIELD,” designed to deploy those unmanned assets by 2027. About ¥1 trillion is earmarked for mass production of long-range stand-off missiles, including hypersonic glide weapons, as Tokyo accelerates a five-year, ¥43 trillion military build-up aimed at countering China and North Korea. Other agencies are also seeking larger envelopes. The Foreign Ministry asked for ¥874.3 billion to bolster disinformation defenses and improve protection for Japanese nationals overseas. The Health, Labour and Welfare Ministry’s medical outlays would rise to roughly ¥48 trillion, while debt-service costs are projected to top ¥32 trillion because of higher long-term yields. The cabinet will negotiate the requests through the autumn before finalising a draft budget in December for submission to the Diet. Economists warn that spending growth continues to outrun Japan’s nominal GDP expansion, underscoring pressure on Prime Minister Fumio Kishida’s government to find new revenue sources or curb expenditures.

Japan’s Ministry of Defense said on 29 August it will deploy ground-launched, extended-range Type-12 surface-to-ship missiles to the Ground Self-Defense Force’s Camp Kengun in Kumamoto in fiscal 2025, with operations to start around March 2026. A second unit will be stationed at Camp Fuji in Oyama, Shizuoka Prefecture in fiscal 2027. It is the first time Tokyo has publicly identified bases for weapons intended to provide what it calls a “counterstrike capability.” The domestically built Type-12 upgrade is designed to fly roughly 1,000 kilometres, enabling strikes on targets far beyond the reach of existing systems. The timetable has been moved forward by about a year and is part of a broader programme that also accelerates deployment of high-speed glide weapons and air- and sea-launched Type-12 variants, to be operated from F-2 fighters at Hyakuri Air Base and the destroyer Teruzuki from fiscal 2027. Officials say the programme will strengthen deterrence against increasing Chinese and North Korean missile and maritime activity near Japan’s southwest islands. Defence analysts note that the missiles’ range places parts of the Chinese mainland within reach, enhancing both deterrence and the risk of retaliation. The ministry has begun briefing local governments to build public understanding of the new deployments.

Japan’s Ministry of Finance said on 29 August that it carried out no foreign-exchange intervention between 30 July and 27 August, countering market speculation that authorities had stepped in to support the yen. Questions about possible intervention intensified after President Donald Trump abruptly dismissed Federal Reserve Governor Lisa Cook on 26 August, a move that pushed the yen into the mid-¥146 range against the dollar and sent Japanese stocks sharply lower. Traders also pointed to unusual moves in super-long Japanese government bonds, although the finance ministry’s data suggest the currency moves were market-driven. The yen has since stabilised near ¥147. Equity and bond markets remain sensitive: the Nikkei 225 tumbled more than 600 points intraday on 26 August before closing 413 points down at 42,394, and slipped a further 185 points to 42,643 by midday on 29 August. The 10-year JGB yield touched 1.62 %, its highest level since 2008, before easing to around 1.60 %.

Japanese Prime Minister Shigeru Ishiba and his Indian counterpart Narendra Modi agreed on a "Japan-India Joint Vision" that sets a goal of mobilising ¥10 trillion (about $68 billion) in Japanese private investment for India over the next decade. The pledge, one of Tokyo’s largest bilateral investment targets, is aimed at expanding manufacturing and infrastructure in areas such as semiconductors, green energy and high-speed rail at a time when New Delhi is seeking to cushion the impact of steep U.S. tariffs. The leaders also committed to facilitating the exchange of 500,000 people within five years. Japan plans to accept 50,000 skilled Indian workers, chiefly in information technology and caregiving, while encouraging reciprocal movement in education, research and industry to deepen economic links and address labour shortages in both countries. On security, Ishiba and Modi revised the 2008 Joint Declaration on Security Cooperation for the first time in 17 years, agreeing to expand defence collaboration, joint training and supply-chain resilience. They announced new economic-security frameworks covering semiconductors, critical minerals and artificial intelligence, underscoring a shared interest in diversified supply chains and a free, open Indo-Pacific.

South Korean President Lee Jae-myung paid his first bilateral visit abroad since taking office, arriving in Tokyo on 23 Aug. He and Japanese Prime Minister Shigeru Ishiba opened a new round of so-called shuttle diplomacy aimed at easing long-standing frictions and shoring up cooperation amid rising regional tensions. After more than two hours of talks, the leaders issued the first joint statement between the two countries in 17 years. The document pledges "future-oriented" and stable relations, calls for closer strategic communication on defense and economic security, and confirms joint work on technology fields such as hydrogen and artificial intelligence. Ishiba and Lee also agreed to expand the working-holiday visa program and to cooperate with Washington on the denuclearization of North Korea, while reaffirming the historical accords that underpin bilateral ties. Lee left Tokyo on 24 Aug for Washington, where he will meet U.S. President Donald Trump on 25 Aug. Lee has said the White House summit will address North Korea, defense cost-sharing and tariff disputes. Trump questioned South Korea’s political stability in social-media posts ahead of the meeting but told reporters the two sides "will have a good conversation" when they convene at the White House.

The city of Toyoake in central Japan has submitted a draft ordinance urging all residents to restrict discretionary smartphone and tablet use to two hours a day. Mayor Masafumi Koki told the municipal assembly on 25 August that excessive screen time is contributing to sleep loss and mental-health problems across age groups, and said the measure is intended as a guideline rather than a legally binding rule. The proposal—formally titled the Toyoake Ordinance on Appropriate Use of Smartphones—includes recommended curfews of 9 p.m. for elementary-school pupils and 10 p.m. for junior-high students and older. Work and study-related use would be exempt, and no fines or other penalties are planned. City officials say the bill is the first in Japan to cover an entire population rather than focusing only on children. Public feedback has been sharply divided. By midday on 25 August the city had received 83 phone calls and 44 emails, about 80 percent of which questioned whether local government should police private leisure time. Supporters, however, welcomed the move as a step toward tackling smartphone dependency. The ordinance is now in committee review and is scheduled for a plenary vote on 22 September. If adopted, it would take effect on 1 October. The initiative comes as authorities worldwide step up efforts to curb digital overuse, with South Korea preparing a nationwide classroom phone ban in 2026 and several U.S. states ordering schools to draft restriction policies.

Japan’s Immigration Services Agency has drafted a ministerial ordinance that sharply tightens the criteria for the country’s business manager visa, a status that allows foreign nationals to start, run or oversee companies in Japan. The proposal, unveiled on 25 August, would raise the minimum capital requirement six-fold to ¥30 million (about $200,000) and obligate applicants to employ at least one full-time worker. Applicants would also need at least three years of management experience or an academic qualification equivalent to a master’s degree in a related field, and their business plans would have to be vetted by certified small- and medium-enterprise consultants. The agency opened a public-comment period through 24 September and aims to bring the revised rules into force in mid-October. Officials say the overhaul is intended to curb abuses of the current regime, which requires capital of just ¥5 million or two staff members and has been criticised for enabling “paper companies” set up solely to obtain residency. As of end-2024, a record 41,615 people held the visa, yet only about 4 percent would satisfy the proposed capital threshold. Existing visa holders will be given a grace period, with details to be determined.

Tokyo prosecutors from the Special Investigation Division of the Tokyo District Public Prosecutors Office have conducted a series of raids on the offices and related locations of Akira Ishii, a member of the House of Councillors from the opposition Japan Innovation Party. Ishii is suspected of fraud involving the misappropriation of approximately 8 million yen ($54,000) in salaries paid by the government to public secretaries who reportedly had no actual work duties. Investigators believe multiple fictitious individuals were registered as public secretaries to claim these salaries. The investigation has included searches at Ishii's local office in Ibaraki Prefecture and his residence, with authorities analyzing seized documents and questioning associates to trace the flow of funds. Following the raids and ongoing inquiry, Ishii announced his intention to resign from the Diet and expressed willingness to fully cooperate with the investigation. Subsequently, the Japan Innovation Party expelled Ishii from its membership. Meanwhile, the party's secretary-general, Hiroshi Nakatsukasa, apologized for the incident, stating that if the allegations prove true, it would be regrettable. Additionally, the party clarified that reports implicating another member, Takumi Ikeshita, in similar misconduct were erroneous, with the Yomiuri Shimbun newspaper issuing a public correction and apology for misidentifying the subject of the investigation. The case has raised concerns about potential systemic issues in Japanese politics regarding the misuse of public funds for secretary salaries.

The Japanese government has finalized a new roadmap for managing soil removed during decontamination efforts following the 2011 Fukushima Daiichi nuclear disaster. Starting next month, the government will begin reutilizing this soil at central government facilities in Tokyo's Kasumigaseki district. A key element of the plan includes initiating the selection and investigation of candidate sites for the soil's final disposal outside Fukushima Prefecture around 2030. The government aims to complete the final disposal site selection by approximately 2035. This roadmap was formalized during a ministerial meeting at the Prime Minister's Office and reflects a coordinated effort to address the long-term handling of contaminated soil. Some local Fukushima landowners have expressed opposition to the disposal of soil outside the prefecture, emphasizing the need for careful consideration. The government has instructed relevant ministers to ensure steady progress on this plan.

The Japanese government is set to tighten the requirements for foreign nationals seeking the "business manager" residency status, commonly known as the business management visa. The Immigration Services Agency plans to raise the minimum capital requirement from the current ¥5 million (approximately $35,000) to ¥30 million (around $200,000), with the new rules expected to take effect in mid-October 2025. This move aims to address concerns about the misuse of the visa by individuals exploiting it as an easy way to settle long-term in Japan, including through paper companies. Additionally, applicants will be required to have permanent staff, further tightening the criteria. Alongside these visa changes, the government will also enforce stricter regulations on the conversion of foreign driving licenses to Japanese licenses, effective October 1, 2025. The revised rules mandate the submission of a resident certificate, excluding short-term visitors such as tourists from the license conversion process. These policy adjustments come amid a rapid increase in the foreign resident population in Japan, prompting the government to establish a team to study the broader social and economic impacts of this demographic change. The Ministry of Health, Labour and Welfare reported that 69% of businesses employing foreign workers cited labor shortages as the primary reason. The government is also preparing a fundamental review of immigration policies to prevent social division between citizens and immigrants.

Foreign investors turned net sellers of Japanese securities for the latest reporting week, unloading ¥496.8 billion ($3.4 billion) of equities and ¥106 billion of government bonds, according to Ministry of Finance figures released Thursday. The reversal follows net purchases of ¥1.16 trillion and ¥197.9 billion, respectively, in the previous week. The data also showed Japanese investors cutting exposure abroad, with outflows of ¥167.2 billion from overseas bonds and ¥306.1 billion from foreign equities. The broad pullback in cross-border flows comes as market participants increasingly price in the possibility that the Bank of Japan may lift short-term interest rates in the near term after keeping them near zero for years. Investors are now focused on Thursday’s auction of two-year Japanese government bonds for signals on demand at the front end of the curve. Separate statistics from the Japan Securities Dealers Association point to a longer-running shift: net foreign purchases of ultra-long JGBs shrank about 70% in July to ¥479.5 billion, underscoring waning overseas appetite as yields edge higher.

The Japanese Cabinet Office and the Tokyo Metropolitan Government have jointly released an AI-generated computer graphic video simulating the potential effects of a large-scale eruption of Mount Fuji. The simulation illustrates extensive volcanic ash fallout, with ash deposits reaching up to 10 centimeters in Tokyo's Shinjuku district, located approximately 100 kilometers from Mount Fuji. The video depicts the city enveloped in ash, resulting in severely reduced visibility and disruption of infrastructure, including roads and railways. The simulation also highlights the risk of house collapses and widespread interruption of essential services and supply chains, emphasizing the difficulty in obtaining daily necessities. The authorities aim to raise public awareness about the possibility of such an eruption and the importance of preparedness, including stockpiling emergency supplies sufficient for at least two weeks and prioritizing sheltering at home. The release of the video coincides with Japan's Volcano Disaster Prevention Day, underscoring the urgency of disaster readiness for the 37 million residents in the greater Tokyo metropolitan area. The government stresses that while large volcanic eruptions are infrequent compared to other natural disasters, the potential impact on daily life and infrastructure could be severe and immediate.