By Nobuhiro Kubo
TOKYO (Reuters) - Japan plans to accelerate a warship building program to make two frigates a year to patrol the fringes of the East China Sea, where it disputes island ownership with China, three people with knowledge of the plan said.
Japan previously was building one 5,000-ton class destroyer a year, but will now make two 3,000-ton class ships a year, beginning from the April 2018 fiscal year, the people said, declining to be identified as they are not authorized to talk to the media.
It aims to produce a fleet of eight of the new class of smaller, cheaper vessels, which may also have mine-sweeping and anti-submarine capability.
Naval shipyard operators including Mitsubishi Heavy Industries, Japan Marine United Corp (JMU) and Mitsui Engineering and Shipbuilding are expected to bid for the work, the people said.
Japan and China dispute ownership of a group of islands in the East China Sea, about 220 km (140 miles) northeast of Taiwan. In Japan, they are known as the Senkakus, while China calls them the Diaoyu islands.
Senior Japanese military officials have said they are concerned that China may seek to increase its influence in the East China Sea around Japan's southern Okinawa island chain. Japan provides military aid to Southeast Asian countries including the Philippines and Vietnam that oppose China's territorial claims in the neighboring South China Sea.
In a departure from normal procurement practice, Japan's Ministry of Defense said in a report published on Wednesday it will require the winner of the - eight frigate - contract to offer major portions of the build to other bidders.
The change is meant to ensure naval shipyards remain open.
In the past two years, JMU has won contracts to build the larger Aegis-equipped destroyers, raising some concern among defense ministry officials that rivals could shutter their shipyards, one of the sources said.
"We need to ensure our ability to build naval vessels at home," the person said.
The new ships will cost 40-50 billion yen ($353-$443 million) each, another of the sources said.
(Reporting by Nobuhiro Kubo; Writing by Tim Kelly; Editing by Ian Geoghegan)