Churchill applied the last war's escort lesson to a future submarine threat

Did Churchill overlook Japanese modernization when he redirected British construction toward escorts?

No; he prioritized the escort shortage revealed by World War I, even though the immediate German submarine threat was still developing.

Churchill remembered that Britain had built a large battle fleet before World War I yet entered the submarine campaign without enough escorts. The awkward part was timing: Germany lacked a comparable battle fleet in 1939, while its U-boat force did not become truly formidable until 1941. A valid historical lesson can still distort procurement when it is applied too literally to a different opening balance.