Asia rearming fast, but counting wrong kind of military power

BEIJING, 20 AUGUST 2026 —

Asia’s Military Edge May Hinge on Factories, Not Just Firepower

TOKYO/BEIJING/NEW DELHI — For six decades, Nissan’s Oppama plant south of Tokyo churned out 18 million vehicles, including the world’s first mass-market electric car. By 2028, the factory is slated to close—unless a new tenant emerges. US defence firm Anduril is in talks to repurpose the site, converting it into a drone manufacturing hub adjacent to the Yokosuka naval base. The deal, if finalised, would spotlight a critical but overlooked question in Asian defence: whether the region’s militaries can rapidly replenish lost equipment, repair damaged assets, and sustain prolonged conflict.

Spending Surge Masks a Deeper Gap Military expenditure in Asia and Oceania hit US$681 billion in 2025, the fastest annual increase since 2009, according to the Stockholm International Peace Research Institute (SIPRI). Japan’s defence budget grew 9.7%, while India’s rose 8.9%. Yet these figures mask a fundamental weakness: most governments still measure military strength by countable assets—ships, jets, and missiles—rather than the ability to regenerate lost capabilities. Ukraine’s war has exposed this flaw. Stockpiles determine how wars begin; regenerative capacity—factories, repair networks, and spare-parts pipelines—decides how long they can be fought.

The Factory Floor as a Battleground Defence ministries traditionally prioritise multi-year contracts for high-cost platforms over sustaining industrial capacity. Japan, despite its precision manufacturing and skilled workforce, struggles to scale domestic arms production due to high costs and corporate structures that treat defence as a low-margin sideline. Arms imports surged 76% from 2021 to 2025, with 95% sourced from the US. Anduril’s potential takeover of Oppama would require steady orders from Japan’s Self-Defence Forces to justify the investment—a challenge given Japan’s budget constraints.

China, meanwhile, boasts the world’s largest drone manufacturing sector, with civilian drone output rising 37.3% last year. Yet its military’s regenerative capacity remains untested. Can Chinese forces maintain communications under electronic warfare, coordinate across services, and integrate diverse hardware? External verification is impossible. India, the world’s second-largest arms importer, has diversified suppliers—cutting Russia’s share of purchases from 70% a decade ago to 40%—but integration challenges persist. In a 2025 air clash with Pakistan, an Indian Rafale was lost, highlighting how even advanced platforms falter without seamless interoperability.

No Yardstick for Regeneration No published data compares how quickly China, Japan, or India could replace losses, repair damage, or restore networks. The new metric—regenerative capacity—cannot rank militaries but reveals critical gaps: China lacks combat-tested conversion mechanisms, Japan struggles with commercial sustainability, and India faces integration hurdles.

Money Follows the Mission Global defence spending is shifting from platforms to replenishment, repair, and upgrades. Electronics, communications, and automation firms—not just traditional weapons makers—are poised to benefit. Oppama’s fate may remain uncertain, but the debate it sparks is urgent: after approving record budgets, will Asian governments fund the invisible but infrastructure of wartime resilience?

The next crisis may still be decided by the sheer volume of drones, munitions, and ships. Yet the real measure of power will be the factories regenerating them.

—David Zhang is an analyst at Trivium China. This commentary first appeared on the Lowy Institute’s Interpreter blog.