Japan’s quest for economic security | By Dr Imran Khalid


Japan’s quest for economic security

IN the last few months, particularly after the release of Japan’s new National Security Strategy document in December last year, the phrase “economic security” has acquired inordinate attention in the media and academia. Japan is perhaps among the select-few countries that are very seriously working on the adoption of the concept of economic security. In fact, in Japan’s NSS document, the authors have tried to equalize the weightage of strategic security with economic security. Intense focus on the economic security by the Kishida regime is quite palpable in every action.

Apparently, two key factors have driven the Japanese policy makers to pursue economic security with so much fervour: one is China and the other factor is the craving for the acquisition of critical emerging technologies like artificial intelligence and quantum computing. Interestingly, unlike the main chapter of the NSS, which categorically declares China as the “disruptive force” for regional and global stability, the paragraphs on economic security don’t explicitly mention China as a rival in this domain. In many ways, Japan’s economic security policies, which embody the concept of shoring up national interests from an economic perspective, are different from other countries – including the United States that has waged a trade war against Beijing in the name of protecting economic interests.

Envisioned in 2019 by the Liberal Democratic Party (LDP as a part of formal recommendation, Japan’ s “economic security strategy” was officially released by the party in the last quarter of 2020. The last two years have seen consistent work by the LDP leadership to lay down a comprehensive implementation plan – which includes supply chain resiliency, nurturing of critical industries of the future as well as induction of the corporate sector in the whole process. An entire section has been dedicated to “Promoting Economic Security Policies to Achieve Autonomous Economic Prosperity in the country’s new 26-page National Security Strategy document. The most striking part of the economic security in Japan is the plan to redesign the entire government structure and functions on the basis of this central theme.

In a bid to dilute attention from his continuously waning public approval ratings, Japanese Prime Minister Fumio Kishida has intensified the internal branding of the phrase “economic security”. He has been quite successful in this gimmick. Courtesy Kishida’ s personal obsession, “economic security” has become a new mantra in Japan, and it is being routinely used in the prime time talk shows in electronic media and in the government strategy documents. Not surprisingly, the scope and definition of economic security in Japan is not well demarcated, it includes a diverse plethora of multiple – and often overlapping – initiatives.  A new ministry of economic security has been created at the Cabinet level and it is assigned an economic division within the National Security Secretariat, which is planning and coordinating economic security policies with other ministries such as foreign affairs, defence, intelligence and financial services.

Exactly like any strategic security policy, Japan’s economic security is focused on both “protection and growth” aspects: three divisions are assigned to oversee the defence mechanisms such as tech controls, visa screening and cyber security, besides devising industrial policies to support the critical new industries. The Economic Security Promotion Act (ESPA), which was approved by the parliament in May 2022, reflects the span and depth of economic security thinking in Japan. Four key areas are focused by the ESPA: securing supply chains of critical material, nondisclosure of patents, patronizing the development of advanced technologies and safeguarding the infrastructure.

In fact, economic security is not just about “security” or defence, but it is more about economic growth. It is the integral part of the Kishida regime’s long-term plan for the resurgence of Japan’s economy, which is suffering from the “lost decades” due to stagnant growth rates. So, growth is the dominant feature of Kishida’s economic security policies. Unlike the United States, where economic security is limited to trade war and technology competition with Beijing, Japan’s economic security concept is much wider and holistic in approach – with focus on fostering domestic economy on broader terms and devising the program to make it more competitive and relevant.

While a big section is allocated in the NSS on China’s growing belligerent attitude – in the context of its military preparedness – but there is no mention of China in the section pertaining to economic security. Nonetheless the context is predominately China-centric. “Japan will curb excessive dependence on specific countries, … promote capital reinforcement of private enterprises with critical goods and technologies, and strengthen the function of policy-based finance, in pursuit of protecting and nurturing critical goods,” says the NSS. Unquestionably, the economic security package is quite comprehensive in its outlook and approach, but it is too early to predict the quantum and complexion of the metamorphosis in the corporate behavior, particularly with reference to China, which incidentally happens to be Japan’s largest trading partner. The implementation of the ESPA is still in the nascent stage and its subsidies are yet to be fully tested.

The problem with Japan is too much trade interdependence with China while it is trying to tread the path of economic security. Kishida has deliberately fanned the concept of economic security to the point of public fever pitch. Both the United States and Japan consider China as the main threat to their respective economic security but both have adopted much different approaches. Washington is moving forward with a very limited and myopic mindset: which is limited to mostly technocratic verdicts like hiking tariffs, export controls, and subsidies for semiconductors. On the other hand, Japan has an aggressive approach that includes reorganization of the whole infrastructure that is dictating and incentivizing the Japanese manufacturers to lessen dependency on the Chinese suppliers and increasing focus on innovation and diversification of product lines. Rare minerals are one of the success stories of Japan’s economic security.

Even much earlier than coining the phrase, almost ten years ago, Japan started investing heavily in new suppliers and recycling techniques to lessen dependency on China in this domain – which used to be 90 percent and now it has slipped down to lower than 60 percent. The initial success of the Japanese model of economic security is apparently very attractive to the Americans, but it is not likely to be replicated because of the absence of urge in the United States to “strategically reorganize” the government and realign it with the broader parameters of economic security. Only a massive paradigm shift and synchronization between the Capitol Hill and the White House can push the US on the path of comprehensive economic security. Nonetheless, Japan is quite successfully moving in the direction of economic security with a holistic approach and this will certainly act as a role model for other countries in the coming days.

—The writer is political analyst, based in Karachi.
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