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From The Japan Times:

’08 defense budget boost eyed for new jets, PAC-3s
Kyodo News
Thursday, Aug. 30, 2007

The Defense Ministry plans to seek ¥4.82 trillion in budgetary appropriations for fiscal 2008, an increase of 0.7 percent from the initial budget for the current fiscal year that began April 1.

The budgetary request, reported Wednesday morning at a joint meeting of defense-related committees of the ruling Liberal Democratic Party, includes ¥112.3 billion for upgrading the Air Self-Defense Force’s fleet of fighter jets.

Originally planned for next spring, the selection of next-generation fighters has been delayed because of stalled negotiations with the United States over sales to Japan of the state-of-the-art F-22A Raptor stealth fighter.

The U.S. House Appropriations Committee approved in late July a draft defense budget for fiscal 2008 that maintains a clause to ban the export of the Raptor.

The move is believed to reflect U.S. concerns about the possible leak of sensitive U.S. technology if the advanced stealth fighter is sold to Japan.

In anticipation of the bid of the next-generation fighter, Japan has its own indigenous project underway: ‘Shinshin’. It has been under development as ATDX at Mitsubishi Heavy Industries, responsible for the infamous Zero, and licensee of many of the ASDF’s fighters: F15J, F2, F1 and F4EJ.

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