The new fighter, dubbed the F-3, will serve as a key component of Japanese air power in the coming decades and could cost Asia's second biggest military as much as $40 billion, depending on its specifications.
Tokyo faces a crunch choice between ordering an industry-pleasing advanced stealth fighter or opting for a cheaper conventional combat jet that will deliver a bigger bang for taxpayers' yen.
In March, Japan's Ministry of Defence issued a request for information (RFI) to gauge interest among foreign aerospace companies for jointly developing the F-3, which would operate alongside Lockheed Martin's new F-35s and older F-15s.
"It cuts to the core of the future of Japanese defense industry," said an industry source, who asked not to be identified because he is not authorized to talk to the media. "The rising threat from China and most immediately North Korea no longer supports a relaxed industrial base. There is now a premium on actual capability." North Korea's nuclear tests and recent rocket tests, particularly the apparent successful launch in June of an intermediate-range Musudan ballistic missile, have spooked Japan.
Tokyo is also dealing with record encounters with Chinese military jets in the skies around disputed islands in the East China Sea.
A final decision on the project is expected by early 2018. (end of excerpt)
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