Tokyo set to unveil massive stimulus budget

Japan's new government is to unveil a massive US$227 billion extra budget on Friday designed to breathe life into the world's third-largest economy, rebuild disaster-hit areas and beef up the military. Prime Minister Shinzo Abe, a hawk who came to power last month on a pledge to reverse Japan's fading fortunes and get tough on diplomacy, is to outline details of the budget at a press briefing in Tokyo around 0100 GMT. Earlier reports said the extra budget and other stimulus could top 20 trillion yen (US$227 billion) for the year to March, as the nation suffers a drop-off in demand from key export markets including debt-hit Europe. Tokyo would spend about 10.3 trillion yen for the package, with the remainder to be shouldered by local governments and the private sector. About 5.0 trillion yen would be earmarked for public works projects, with some 1.6 trillion yen for reconstruction in areas hit by the 2011 earthquake-tsunami disaster, reports said, as post-Fukushima Japan struggles to cement a recovery. Other funds would be directed at job growth and stirring tepid domestic demand, the leading Nikkei business daily reported. Tokyo's budget, which would reportedly be financed by borrowing, is also to include plans to make more schools and hospitals earthquake resistant, upgrading ageing infrastructure and funding Japan's public pension programme. But big spending plans have stoked fears over Japan's already tattered fiscal health, the worst among industrial countries with public debt standing at more than twice the size of the economy. A relatively small 180.5 billion yen would be spent on missiles, fighter jets and helicopters to beef up Japan's military. It comes as Japan is embroiled in an increasingly bitter territorial row with China over a group of uninhabited islands in the East China Sea. Nerves have also been rattled by an unpredictable North Korea, which sent a rocket over Japan's southern islands last month. Beijing has sent vessels to the area dozens of times since -- most recently on Monday -- and late last year dispatched a plane in what was the first ever intrusion into Japanese airspace by its sometimes hostile neighbour. On Tuesday, Tokyo summoned the Chinese ambassador for the first time under the new nationalist government to "strongly protest" against the presence of official ships in waters around disputed islands.