The Defense Ministry will seek another record budget of over ¥5.4 trillion ($49 billion) for fiscal 2022, aiming to beef up its capabilities around remote southwestern islands to counter China's growing naval activities, government sources have said.

The request would exceed the ministry's highest-ever ¥5.3 trillion initial budget for fiscal 2021, which started in April, and also reflects an increase in the cost to develop cutting-edge technologies, such as unmanned aircraft using artificial intelligence, the sources said Thursday.

The defense budget could further expand, possibly topping 1% of Japan's gross domestic product, when it is finalized in December, as the request excludes outlays linked to hosting U.S. military bases. Such outlays total about ¥200 billion every year.