By Tim Kelly
TOKYO (Reuters) - Global arms firms showed off on Wednesday their wares in Japan as it prepared a plan to buy billions of dollars of U.S. military equipment, including at least 40 Lockheed Martin F-35 stealth fighters worth about $4 billion, four sources said.
The Lockheed Martin Corp F-35s, which will replace 100 aging F-15 fighter jets, are in addition to an earlier order for 42 of the aircraft.
The new procurement will leave Japan with about 100 stealth fighters, including some vertical take off B variants that could fly from helicopter carriers, in a bid to give it an edge over China in the contested East China Sea.
"It will be around 40 new aircraft," said one of the sources with knowledge of Japan's five-year plan.
He described a Tuesday report in the Nikkei business daily that Japan would buy as many as 100 new F-35s as "aspirational".
The procurement plan, which will be released in December with a paper outlining defence goals, is widely expected to accelerate defence spending increases that are already pushing Japan beyond a self-imposed limit of 1 percent of gross domestic product.
Despite having a pacifist constitution, even at 1 percent, Japan already ranks as one of the world's biggest military spenders.
Japan is bolstering defences against North Korean ballistic missiles with two Lockheed Martin Aegis Ashore air defence batteries.
It also wants to build a military equipped with modern fighter jets, longer range missiles and drones, as well as ships and aircraft to ferry soldiers to project power along an island chain stretching almost to Taiwan.
For the year starting on April 1, 2019, the Ministry of Defence is seeking a 2.1 percent increase in spending to 5.3 trillion yen ($46.54 billion) for the seventh straight annual increase.
Those outlays have drawn foreign defence contractors to this week's Japan International Aerospace Exhibition in Tokyo.
Limited space at the show, which is being held early to avoid a clash with the 2020 Tokyo Olympics, means that 300 fewer domestic companies are exhibiting compared with two years ago.
But the number of foreign companies has gone up to 294 from 195.
"We see opportunities for more F-35s," said Andy Latham, head of business development for military aviation at BAE Systems, which builds the fighter's rear fuselage.
The British company also wants to partner with Japan on a new, longer-range fighter. They are together studying the development of beyond visual range air-launched missiles.
"That's indicative of the type of longer operations that Japan can become involved in," Latham said.
U.S. contractors may be the biggest winners of Japan's increased spending because purchases of their equipment will help Japan deflect criticism from President Donald Trump over a trade surplus he says hurts U.S. workers.
Trump, who has threatened to put tariffs on Japanese cars, wants to make the United States even more dominant in the global weapons trade.
U.S. overseas arms sales to foreign governments rose 13 percent to $192.3 billion in the year ending on Sept. 30, the State Department said this month.
Japan, which is bound to the United States by a treaty that obliges U.S. defence of Japan, is already one of their biggest and most profitable U.S. markets.
"It seems that there are a lot of requirements and evolving ones," said Kenneth Loving, the regional director of General Atomics Indo Pacific, as he stood next to a model of an Avenger drone.
Japanese military planners are interested in that General Atomic unmanned aircraft, one of the sources said, because in addition to patrolling Japanese waters, it could be used to target ballistic missiles aimed at Japan.
($1 = 113.8700 yen)
(Reporting by Tim Kelly, additional reporting by Toshifumi Takemoto; Editing by Robert Birsel)