Japan is considering building its own fighter jets after years of playing second fiddle in a US construction partnership, a report said Thursday, in a move likely to stoke fears of its military resurgence among Asian neighbours.

Japan's attempt in the 1980s to build its first purely domestic fighters since World War II faced US resistance and resulted in joint US-Japan development and production of the F-2, the Nikkei newspaper said.

But joint F-2 production ended more than two years ago and the last of the fighters are due to be retired from Japan's air defence force around 2028, it added.

The defence ministry plans to seek about 40 billion yen ($387 million) in state funding for the next year starting in April 2015 to test experimental engines and radar-dodging stealth airframe designs for a purely Japanese fighter, the report said.

According to its medium-term defence programme, the Tokyo government will decide by the 2018 financial year whether to go ahead with the all-Japanese fighter project.

There is a growing need for Japan to develop a long-haul, highly stealthy fighter jets in face of China's increasing assertiveness in the East China Sea, where the two countries are locked in a dispute over a group of Tokyo-controlled islands, the Nikkei said.

Beijing regularly warns of what it says is Tokyo's intent to re-arm on the quiet, saying selective amnesia about its World War II behaviour means it cannot be trusted to have a fully-fledged military.

Last month the cabinet of conservative Prime Minister Shinzo Abe loosened the bonds on Japan's military -- proclaiming the right to go into battle in defence of allies -- in a highly controversial shift in the nation's post-war pacifist stance.

Japan denies its intent is anything other than defensive, and hits back that Beijing's opaque military spending and its burgeoning ambitions are the real danger.

The defence ministry started work four years ago on the so-called Advanced Technology Demonstrator-X (ATD-X) plane to explore the project's feasibility by studying lightweight airframe designs and built-in missile-firing mechanisms, the Nikkei said.

The ATD-X is due to start testing experimental engines in January and the stealth airframe designs in April, the report said.

The ministry hopes to develop the actual engines for the project in cooperation with IHI, Mitsubishi Heavy and other defence contractors in about five years.

Developing a purely domestic fighter is estimated to cost a massive 500-800 billion yen ($4.8-7.7 billion), the report said.