Military spending across Asia and Oceania reached $573 billion in 2025, a 6.0% rise from the year before, leaving the region with roughly 22% of all global defence outlays. South Korea now ranks among the world’s top arms exporters, signing some $22 billion in land-systems contracts with Poland between 2022 and 2024. Japan, in March 2024, approved its first export of jointly built fighter jets. The flow that ran West-to-East for decades has begun to reverse.
Western inventories, drained by transfers to Ukraine and Middle East operations, now look to Asian production lines to refill. The question is no longer whether Asia can build at scale, but who controls the technology once it does.
For most of the postwar era, the arms trade moved in one direction. Washington and the capitals of Western Europe built the tanks, the missiles, the fighter jets; Asian governments wrote the cheques and took delivery. That arrangement is no longer a safe assumption.
South Korea’s Hanwha Aerospace is now shipping K2 tanks and self-propelled guns to a NATO member on Europe’s eastern flank. Japan has loosened export rules it spent four decades defending. The United States, short of the factory capacity to arm itself and its allies at once, is openly asking Asian partners to build for it.
None of this is sudden. The spending has climbed for years, and the industrial logic behind it was visible well before the first Korean tank rolled into a Polish depot. What has changed is that the buyers became builders, and the builders found customers among the powers that once supplied them. The reversal is real. What it costs the West is the harder question.
The buyers became the builders
The clearest evidence sits in SIPRI‘s 2025 figures, published in April 2026. Asia and Oceania spent $573 billion on defence, growth that the Stockholm institute attributes largely to China, Japan and India. Nan Tian, a senior researcher in SIPRI‘s Military Expenditure programme, ties the rise to long-term modernisation and security worries rather than any single shock. The trend, in other words, predates the headlines.
The export numbers tell the sharper story. South Korea climbed to seventh among global arms exporters for 2020–24, up three places from the prior five years, on the strength of deals like its land-systems package with Poland. Seoul’s then-foreign minister, Park Jin, framed those contracts as part of becoming a “global pivotal state” — a phrase that does real work, since it recasts commercial sales as alliance contribution.
Japan moved more cautiously, and the caution is the point. Its March 2024 cabinet decision permitted export of the next-generation fighter built with Britain and Italy under the Global Combat Air Programme, the first serious crack in the 2014 Three Principles on Transfer of Defense Equipment and Technology. Tokyo’s broader trajectory — doubling its budget toward 2% of GDP — is detailed in Japan’s Defense Buildup Program, and we have covered how that ambition is reshaping Japan into Asia’s third power pole.
South Korea’s edge is not technology alone. Its Defense Acquisition Program Administration is built to push co-production and technology transfer, and Hanwha won Warsaw by promising fast delivery and a Polish production line. The figures confirm the scale of the shift. What they do not explain is why the West needs Asia to build at all.
The West ran out of factory floor
Empty bins are not a new problem; they are a recurring one. After the Cold War, Western governments treated munitions plants as cost centres and let them shrink. Then Ukraine burned through stockpiles faster than anyone had modelled. Stacie Pettyjohn, who directs the defence programme at the Center for a New American Security, has argued plainly that the United States needs production spread across allied countries to sustain any long fight. The factory floor, not the design lab, became the bottleneck.
That gap is why the pieces fit together. Japan wants out of its purely peaceful role; South Korea wants to lock in its place among the top exporters; Washington wants production it does not have to build itself. China, frozen out of Western markets, leans on self-reliance and below-cost deals to Pakistan and the Middle East — a separate system running on its own logic.
Here is the dry qualifier the moment deserves. Every decade or so, an ally promises to ease a Western capacity crunch, and the deal holds only until the technology questions start. Co-production in Asia secures scale today and risks offshoring the know-how needed to rebuild Western lines tomorrow. The reversal is real. Whether the West keeps control of what it has outsourced is the chapter still being written.
Beyond the headline
The bigger picture
Asia’s rise as a builder is not only about bigger budgets. It reflects a deliberate move to wire the region into alliance logistics for any drawn-out fight with China. Building artillery, missiles and ships that plug straight into US force structures turns industrial geography itself into a tool of shared deterrence.
The money trail
Beneath the talk of shared security, billions in service contracts, licensed production and royalties will flow to whichever firms secure roles in high-end supply chains. Choices made now about co-production sites and export rules will decide who collects that money long after the current wars fade.
The reach
For European ministries, the practical payoff is the option to buy NATO-compatible kit without waiting for US or EU lines to clear. That flexibility shifts planning assumptions on stockpile depth and readiness, and reopens old fights over which home industries still count as indispensable.
Where to watch the next move
With Washington and Brussels both leaning on outside suppliers over the next 18 to 24 months, the people tracking this story should watch a handful of specific signals.
- Defence-sector investors
Follow which firms win co-production roles, not just headline contracts — the licensing and royalty revenue lasts decades longer than a single order. Hanwha’s Polish line is the template; the next Korean or Japanese deal announced around Eurosatory 2026 will show whether Europe is making Asia a permanent second base.
- Policy and security analysts
Read the US Department of Defense’s published materials on the Replicator initiative at defense.gov to see how far Washington plans to route autonomous-systems and munitions work through Asian partners over the coming two years.
- European procurement watchers
Track the EU’s Act in Support of Ammunition Production and the EDIRPA procurement act on consilium.europa.eu. They reveal how far European governments will go in relying on non-EU suppliers, Asian manufacturers included, for urgent ammunition needs.
Explainer
- Global Combat Air Programme
- A joint project by Japan, the United Kingdom and Italy to develop a next-generation fighter jet, with a target service date around 2035. It merged Britain’s Tempest programme with Japan’s F-X effort, marking Tokyo’s deepest entry yet into multinational arms development. Its export clause forced Japan to rewrite rules it had held since 2014, making the jet a test of how far Tokyo will normalise high-end arms sales.
- SIPRI
- The Stockholm International Peace Research Institute, an independent body founded in 1966 that tracks global military spending and arms transfers. Its annual datasets are the standard reference for governments, analysts and journalists measuring defence trends. Its 2025 figures place Asia and Oceania at 22% of world military spending, a share that has crept upward as Western budgets plateaued after the Cold War.
- Defense Acquisition Program Administration
- South Korea’s central agency for buying weapons and promoting its defence industry, operating under the Defense Acquisition Program Act. It is legally mandated to foster a self-reliant industrial base and to push exports through offsets, co-production and technology transfer. That mandate is why Korean firms can promise overseas buyers local assembly lines, a selling point that helped Hanwha beat Western rivals in Poland.
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