Prime Minister Shinzo Abe ordered the defence policy review after returning to office last December, pledging to strengthen the military and boost Japan's global security role.
The new defence guideline and military build-up plan, to be approved by the government next week, follow China's declaration in November of a new air defence identification zone in an area that includes the disputed isles, triggering protests from Tokyo, as well as Washington and Seoul.
The drafts of the two plans were made available at a meeting of ruling Liberal Democratic Party (LDP) lawmakers and shown to reporters. Final versions of the defence guideline, which lays out Japan's defence policy for the next 10 years, and the build-up plan, called the mid-term defence programme and covering a five-year period, will be unveiled next Tuesday.
Citing Japan's concerns about what it calls Beijing's attempts to change the status quo with force, the guideline says Japan will "respond calmly and resolutely to the rapid expansion and step-up of China's maritime and air activities."
Japan plans to set up an amphibious unit designed to take back the remote islands in case of invasion and boost the number of fighter jet squadrons at its Naha base on Japan's southern island of Okinawa to two from one to maintain air superiority.
One squadron usually consists of 20 fighter jets.
It also plans to procure unmanned surveillance planes and establish a unit of E-2C early warning aircraft at the Naha base, the draft of the build-up plan said.
E-2Cs, routinely used to keep watch in the area surrounding the disputed islands called the Senkaku in Japan and Diaoyu in china, are currently based in northern Japan's Misawa base.
MISSILE DEFENCE, LOVE OF COUNTRY
Japan will also bolster its overall capability to respond to missile attacks in the face of improvement in North Korea's ballistic missile technology, the guideline draft said.
But it stopped short of a call to acquire the capability to strike enemy targets - a controversial and costly step that would further stretch what Japan dubs its "purely defensive" defence posture allowed under decades-old interpretations of its post-World War Two pacifist constitution.
"North Korea has repeated conduct that heightens regional tensions ... Its nuclear and missile development, along with provocative words and deeds against us, represent a grave and imminent threat to our country's security," the draft said.
Japan's concerns over a rising China and unpredictable North Korea were also echoed in the country's new national security strategy, a draft of which was also made available.
In a move likely to raise red flags among Abe's critics, who say the hawkish leader is a nationalist ideologue, the draft strategy document calls for "cultivating love of country" and expanding "security education" in institutions of higher learning. Putting more patriotism in school curricula was the aim of a revision of a law on education enacted during Abe's first 2006-2007 term, which ended when he abruptly quit in the face of a parliamentary deadlock and ill health.
As expected, the security strategy draft also said Japan will review its self-imposed ban on weapons exports, a move that could reinvigorate Japan's struggling defence industry.
Japan in 1967 drew up "three principles" on arms exports - banning sales to countries with communist governments, those involved in international conflicts or those subject to United Nations sanctions.
The rules eventually became almost a blanket ban on arms exports and on the development and production of weapons, stifling Japanese defence contractors and making it difficult for them to keep up with cutting-edge arms technology. Recent governments have made some exceptions including for joint development with the United States. (Reporting by Kiyoshi Takenaka; Editing by Linda Sieg and Raju Gopalakrishnan)
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