TOKYO (Kyodo) -- Japan should bolster deterrence through drones and submarines equipped with long-range missiles as China expands its maritime assertiveness in the region, while easing its arms export rules to deepen ties with like-minded partners, a Defense Ministry panel said in a proposal Friday.

The report, compiled after more than a year of discussions among experts in security, economics, science and technology, also called for "more flexibility" in the review cycle for Japan's defense buildup plan and the period it covers to adapt to the rapidly changing international situation and evolving warfare methods.

The report was submitted to Defense Minister Gen Nakatani on Friday.

"Further strengthening deterrence and response capabilities is a pressing matter," the report said, noting that the "strategic alignment" among China, Russia and North Korea has reached "a different dimension" from the time when Japan adopted its National Security Strategy in 2022.

Citing Russia's invasion of Ukraine, China's support to Russia through technology provision and North Korea's deployment of troops to aid Russia's war, the document also warned, "There is a high possibility that the three countries will collaborate if a contingency breaks out in the region."

The panel, headed by former Japan Business Federation Chairman Sadayuki Sakakibara, underlined key areas the government should focus on as the country undertakes its most extensive defense buildup since World War II, a major shift in policy under its pacifist Constitution.

The current plan, known as the Defense Buildup Program, allocates 43 trillion yen ($290 billion) over five years through March 2028, aiming for defense spending to reach 2 percent of gross domestic product in fiscal 2027.

Welcoming the 2 percent target, stipulated in the National Security Strategy, which "reflects the nation's will" to increase its defense capabilities, the panel hinted at the need for discussions about further spending despite the tough fiscal situation.

"There should be explanations...about the necessary response to expand defense capabilities further after making efforts to improve operational efficiency and reduce costs," the report said.

The panel called for "full-scale introduction of unmanned assets," criticizing Japan for lagging behind in the use of the technology, and in studying measures such as deploying permanently airborne drones.

Japan has responded to an uptick in Chinese drone activity near its airspace by scrambling fighter jets. Fighters also scrambled when a China Coast Guard helicopter violated Japanese airspace close to the Senkaku Islands in the East China Sea in May.

The uninhabited islets are controlled by Japan but claimed by China, which calls them Diaoyu. Chinese coast guard ships have also repeatedly entered waters around the islands.

The panel also said submarines equipped with long-range missiles, which Japan is moving to acquire for counterstrike capabilities, or the ability to hit enemy bases should the need arise, will lead to a "significant reinforcement of deterrence capabilities."

The report called for studying the use of "next-generation power sources" for submarines that will enable longer-distance travel. The proposal does not rule out nuclear power, an official of the panel's secretariat said.

While underscoring the security alliance with the United States, the panel proposed that Japan strengthen its defense equipment supply chain by promoting joint development with nations other than its key ally and by transferring defense equipment, especially to Southeast Asian nations.

The report pointed to the need to relax an existing rule that restricts the transfer of defense equipment to five so-called noncombat purposes: rescue, transportation, vigilance, surveillance, and minesweeping.

"It is important to widen the path of transfer by securing support from the public," the panel said, adding that lifting all restrictions for countries that share values such as freedom and democracy and are under threat from other nations is "one idea."

Japan Defense Ministry panel calls for more focus on drones, arms exports