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Economic Security of Japan

I. Introduction


Japanese government recently has become increasingly keen of national economic security. This is largely to reflect recent development of global trends, for example, of resorting to economic sanctions to resolve international confrontation as often been adopted by Trump administration of the US, increasingly frequent cyber attacks, and violations of international rules of trade etc.


With an increasing awareness of this issue, the Japanese government has begun to deploy measures to assure national economic security in various aspects. I would like to review some of such developments of recent months, and pose questions as to where Japan is aiming at with what kind of basic consideration of national economic security should be like.

 


II. Recognition of national economic security


Mr.Akira Amari, chairperson of government tax panel and also chairperson of the LDP Caucus of Rule Formation Strategy, is the most earnest proponent for Japan to equip itself with necessary measures of national economic security.


Mr.Amari has been in charge of industrial policy as a minister and also took the chief responsibility of TPP negotiations. With this and other experiences, he has been increasingly keen of the necessity of economic security issues.


Prior to become policy maker of the government, he has spent some yeas as a businessman of manufacturing industry. While working in a manufacturing company,
he cannot but questioning of the common sense of Japanese business that good products will sell well. He thought that products which sell well are good ones. This is because for product to sell well, the product has to take advantage of the market rules conducive for the product. This means that the company has to have a dominant role to set the rules for the market.


This experience has become a basic thought for him to think about the importance of acquiring rule setting capability for a country to protect itself in economic security.


Having worked years as a policy maker, he has encountered many cases that Japanese government officials have been convinced of naive belief that the country should follow “international order of trade” to seek for good trade performance of the country. This is comparable of the naive business thought that good products will sell well.


In his view, the fact is other worldly. Rules of the market are determined by dominant players. And products of the dominant players will sell well because they make the rules for their own interest. By the same token, the country should have the power to set international rules to enjoy its own economic security.


At the same time, in the world where countries are protecting themselves with each other by international security arrangements, the country has to build trust with important allies. Trust building is usually tested by protecting mutual secrecy.


Mr. Amari has been under impression that Japan has been too naive and innocent in terms of international rule setting arena and protecting secrecy with important allies. He has been increasingly active recently to equip Japan with necessary measures to attain capability of protecting national economic security.

 


III. Establishing Economic Task Force in National Security Council


On April 1, office of Economic Task Force was established within the office of National Security Conference with a strong recommendation of Mr. Amari. This is a small office having only 20 staff. However, its mandate is big. It is supposed to control various issues which entangle economy, diplomacy and national security.


The first task it tried to tackle is to protect Japan from COVID19 infection at the shore. Soon the office had to draw a plan to develop Japan’s “statecraft”, specifically, counter measures to protect Japan from China’s influence on diplomacy and corporate activities through their economic means. Behind this preparation was an increased concern held by Japanese government that shares of high-tech Japanese companies whose values were dampened by acute recession caused by COVID19 infection might be purchased by Chinese companies. The office attempted to construct the data base of advanced technologies of Japanese companies.


At the beginning of April, the government determined to reject entry of people who come from COVID19 infected countries. This task was prepared by the forerunner of
the office which had been organized in October 2019. This policy was authorized by the Cabinet meeting as the issue of national security on the ground of article 5 of Immigration Control Law which regulates cases of suspected terrorists.



IV. Various actions taken since then up to now


1. Controlling foreign investments to strategically important Japanese companies
On May 8. revised foreign exchange control law was put to effect. On the basis of this revised law, foreign companies which want to invest into Japanese companies more than 1% will have to report in advance. The upper limit used to be 10%. This policy has been criticized by foreign investors; criteria of choosing “strategically important companies” are vague and inconsistent, and this will hamper foreign investment into Japanese business.


2. Protecting against outflow of advanced technologies
In June, rules have been formulated in order not to let advanced technological information flow out of universities.
Also, on June 26, the government formulated “Integrated innovation strategies” by which inspection of foreign students can be made more strict for fear of scholarly Intellectual spying.


3. National security on information communication in 5G era.
On June 25, NTT and NEC announced that they will work closer again as they had been during the time when NEC was subordinate company of NTT in order to catch up communication technology, particularly to develop jointly post 5G technology. The government announced that it will provide special tax treatment on development of communication technologies by Japanese companies. At the end of June, the US initiated Open RAN Alliance, a part of de fact international network sieging, Huawei, the leading Chinese communication manufacturer, invited NTT to join.

 


V. Caution against China is at the basis of national economic security


The US Trump administration determines accuses harshly China as information spying country. Thus the US is particularly sensitive against Chinese statecraft. The Trump administration is concerned about the fact that China occupies the top of four of the 15 important UN organizations such as ITU(international telecommunication union) and FAO(Food and Agriculture organization). The US, EU and Japan are concerned about and opposing against Chinese proposal to ISO as adopting Chinese Surveillance State model as International Standard to control COVID19 infections.


VI. Japan’s Basic National Security is questioned


An important question is under what kind of grounds and basic thoughts about national security strategy Japan can and should seek to strengthen national economic security.


Japan is military ally of the US. On this ground, Japan has to share security policies closely with the US. At the same time, China is the most important trade partner of Japan, Japan needs to have close and friendly ties with China.


The newly immersing issues of national economic security require both Japanese government and the public to think and discuss this issue deeply and fundamentally.

« "Kurodanomics" : It's Progress and Evaluation | トップページ | Japan’s Choice for Post-Abe Era: Continued Stability or Fundamental Reform »

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« "Kurodanomics" : It's Progress and Evaluation | トップページ | Japan’s Choice for Post-Abe Era: Continued Stability or Fundamental Reform »