Japan fired surface-to-ship missiles and sank an old warship in waters between the Philippines and Taiwan as part of major military exercices that include US forces, angering China.
Prime Minister Sanae Takaichi has accelerated Japan's shift towards a more muscular defence policy, further shedding with US encouragement Tokyo's pacifist stance in place since World War II.
The firing on Wednesday of two Type-88 missiles formed part exercises in the Philippines between US, Australian, Filipino and Japanese troops as well as contingents from France, New Zealand and Canada.
Japanese and Philippine defence ministers observed the launch in the northern province of Ilocos Norte, some 400 kilometres (250 miles) from Taiwan, an AFP reporter at the scene said.
The two projectiles fired hit the target, a retired Philippines navy corvette, around 75 kilometres offshore in the South China Sea a few minutes later, causing it to sink, officials said.
The 19-day Balikatan exercices, meaning "shoulder-to-shoulder" and which wrap up Friday, have involved some 17,000 military personnel including Japanese combat troops for the first time.
Japan in recent years has moved obtain "counterstrike" capabilities while hiking military spending and deepening security cooperation with regional allies including the Philippines.
Last month Takaichi's government relaxed the country's self-imposed rules to allow exports of lethal military hardware, seeking to grab a larger slice of the booming global market.
Last year Japan's Mitsubishi Heavy Industries won a landmark order from the Australian navy -- Takaichi was in Canberra this week -- to supply 11 warships.
Long-frosty China-Japan ties have worsened after Takaichi, seen as an arch-conservative and security hawk, suggested in November that Japan might intervene militarily in any Chinese attempt to take Taiwan.
China, which regards the democratic island as part of its territory and has not ruled out force to annex it, was furious over the comments, advising its citizens to avoid Japan and imposing trade restrictions.
On Wednesday Beijing lashed out at the missile test, calling it "another example of the Japanese right-wing forces' push for accelerated remilitarisation of Japan."
Foreign ministry spokesperson Lin Jian told a regular briefing that "not only has Japan, the aggressor, failed to deeply reflect on its historical crimes, it has even sent military forces overseas and fired offensive missiles under the pretext of security cooperation."
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