By Tim Kelly

TOKYO (Reuters) - Japan's defense ministry on Wednesday asked for a hike in spending to record levels, as it juggles its responses to a growing ballistic missile threat from North Korea and China's assertive moves in the East China Sea.

If approved, the hike of 2.3 percent will take the defense budget to 5.17 trillion yen ($51.47 billion) in the year starting April 1, for a fifth consecutive increase as Prime Minister Shinzo Abe bolsters Japan's military.

The nation's Self Defense Forces are pivoting away from guarding the north against a diminished Russian threat to reinforce an island chain stretching 1,400 km (870 miles) along the southern edge of the East China Sea.

That means opting for fewer tank divisions as they build a mobile amphibious force from scratch.

The costly rejig comes as Japan is also forced to spend more to guard against ballistic missiles being developed by North Korea capable of striking most areas.


The single biggest expenditure is 99 billion yen ($970 million) to upgrade Japan's warhead-killing Patriot batteries, a last line of defense against missile strikes.

The improvements will double their range to around 30 km (19 miles) and sharpen targeting to hit arriving ballistic warheads.

They will take five years to complete, with the first four enhanced Patriots expected to be ready for the 2020 Tokyo Olympics.

In June, North Korea test-fired what appeared to be two mobile Musudan rockets, one of which climbed to 1,000 km (600 miles), or enough to fly more than 3,000 km (1,800 miles) down range.

On Aug. 24, Pyongyang also fired a submarine-launched ballistic missile (SLBM) toward Japan that traveled 500 km (311 miles).

Japan's biggest defense contractor, Mitsubishi Heavy Industries (MHI) <7011.T> will upgrade the PAC-3s under license from Lockheed Martin Corp and Raytheon Co, sources familiar with the plan told Reuters last month.

The budget request also includes funding to improve Aegis destroyers that are Japan's first line of defense against ballistic missiles.

Japan and the United States are developing a new warhead killer, the Standard Missile 3 (SM-3), to destroy targets in space, but no decision on a full rollout has yet been made.


Other proposed defense buys will reinforce the East China Sea, where Japan and China are locked in a territorial dispute over a group of islets 220 km (140 miles) northeast of Taiwan known as the Senkakus in Tokyo and the Diaoyus in Beijing.

Japanese air scrambles against Chinese aircraft are running at a record high, with Beijing's navy probing deeper and more frequently into the Western Pacific beyond Japan's island chain.

Chinese military activity in the region was "escalating," Japan's Self-Defence Forces chief Admiral Katsutoshi Kawano said in June.

Defence officials want 95 billion yen next year to buy six Lockheed Martin F-35 stealth fighters, and a combined 92 billion for four Boeing Co <BA.N> and Bell Helicopter <TXT.N> V-22 Osprey tilt-rotor aircraft and six Boeing Chinook twin-rotor helicopters.

The SDF also wants 11 BAE Systems <BAES.L> AAV7 amphibious assault craft, and two long-range Kawasaki Heavy Industries <7012.T> C-2 military cargo jets.

Other buys will include a Northrop Grumman <NOC.N> unmanned Global Hawk surveillance drone and a new larger-class diesel-electric submarine designed by Mitsubishi Heavy and Kawasaki Heavy.

($1=102.0900 yen)

(Reporting by Tim Kelly; Editing by Clarence Fernandez)