Japan may station troops on islands near China and boost defence co-operation with the US and other allies by lifting a ban on military exports.
Both options are being considered for inclusion in a strategic defence review to be published next month - a fact that will stoke China's concerns about being contained by US and Japanese forces.
Japanese officials say China's handling of recent tensions over the disputed Diaoyu Islands has hardened positions within the cabinet of Prime Minister Naoto Kan. Those tensions flared again yesterday when a Japanese surveillance plane spotted two Chinese fisheries patrol vessels off the Diaoyus, which Japan calls the Senkakus, and anti-China protests were staged in Osaka.
The long-delayed review - the first for six years - will promote stronger and more flexible security co-operation with the US and other countries, particularly South Korea, India and Australia within the framework of Japan's pacifist constitution that limits the military to acting in self-defence.
'I believe the outline will mark a turning point in our strategic and defence planning,' said Professor Satoshi Morimoto, a well-connected former diplomat who is now director of world studies at Tokyo's Takushoku University.
'There is a strong sense now that Japan has to react to an aggressive change in China's foreign policies. What is Japan's leverage to deal with China? That is what we are talking about now.