Paoay, Philippines - Japanese and US forces engaged in military exercises between the Philippines and Japan, firing surface-to-ship missiles that sank an old warship and angered China.

The firing on Wednesday of two Type-88 missiles formed part of exercises in the Philippines between US, Australian, Filipino, and Japanese troops, as well as contingents from France, New Zealand, and Canada.

Japanese and Philippine defense ministers observed the launch in the northern province of Ilocos Norte, about 250 miles from Taiwan, an AFP reporter at the scene said.

The two projectiles hit the target, a retired Philippines navy corvette, around 45 miles offshore in the South China Sea, causing it to sink, officials revealed.

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The 19-day Balikatan exercises will wrap up on Friday and have involved approximately 17,000 military personnel, including Japanese combat troops for the first time.

Japan's heightened involvement comes as Prime Minister Sanae Takaichi accelerates Japan's shift towards a more muscular defense policy, further casting off Tokyo's pacifist stance.

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 defense market.

The Balikatan exercises angered China, which called it "another example of the Japanese right-wing forces' push for accelerated remilitarisation of Japan."

Relations between Tokyo and Beijing have become increasingly tense since Takaichi entered office last year, bringing with her a hawkish attitude towards China and a decisively pro-Taiwan foreign policy.

"Japan once invaded and imposed colonial rule over the Philippines and other Southeast Asian countries, and thus shoulder grave historical responsibilities," said Chinese Foreign Ministry Spokesperson Lin Jian.

"They have repeatedly breached Japan's exclusively defense-oriented policy and relevant rules in international and domestic laws," he said. "We urge the Japanese side to deeply reflect on its history of militarist aggression."