Tokyo Boldly Pushes Into Future Of Aerospace With ¥1 Trillion Fund

After decades of economic stagnation, Japan is betting big on growth in the aerospace industry, particularly the new space sector.

At the center of that gambit is the Japanese government’s ¥1 trillion ($6.8 billion) Space Strategy Fund, a decadelong effort that kicked off in 2024 that the country hopes will transform its industry.

Tokyo wants to double the size of the Japanese domestic space market, to ¥8 trillion (about $54 billion) from ¥4 trillion in 2020 by the early 2030s. By then, Japan wants to launch some 30 rockets into space each year and have more than 30 new satellite services on offer—everything from communications constellations to robotic spacecraft.

Japan’s Space Strategy Fund is the country’s largest dedicated technology development program for aerospace. Although spending from the fund will fluctuate annually, the average amounts to ¥100 billion per year—about 65% of the Japan Aerospace Exploration Agency’s (JAXA) budget in 2025.

Yet the Space Strategy Fund is by no means the country’s only initiative. The Japanese government and industry are retooling across aerospace in anticipation that next-generation technologies could allow the country to seize a greater share of the market.

As Airbus and Boeing put off investments into a next-generation airliner, the Japanese government has launched a hydrogen-powered effort to grab a larger share of that market. The country’s New Energy and Industrial Technology Development Organization (NEDO) is making considerable investments in advanced composite structures that could be used for a blended wing body, as well as fuel cells and hydrogen-burning turbines. Japan also is working to develop cheaper sustainable aviation fuel and create a hydrogen supply chain.

In the automotive field, several of Japan’s large automakers are expanding their involvement in aerospace, aiming to evolve into mobility companies. For example, Toyota is lending its manufacturing expertise and making grants to U.S.-based Joby Aviation, an electric vertical-takeoff-and-landing (eVTOL) aircraft developer. Honda is developing its own hybrid eVTOL, too.

Part of the thinking is that Japanese excellence in automotive manufacturing—the sort that perfected lean manufacturing and produces millions of cars annually—can boost the country’s prospects in the nascent space and eVTOL sectors.