Japan's Economic Security Moment: Turning Resilience into Strategic Advantage
When Prime Minister Shigeru Ishiba unveiled a ¥10 trillion ($65 billion USD) tech sovereignty investment package last November, he did more than shower subsidies on semiconductor fabs and artificial intelligence (AI) startups. He signaled that, in 2025, the front line of national defense runs through 2‑nanometer clean rooms in Hokkaido and quantum test beds in Kawasaki, not merely destroyers in Yokosuka.
The tech sovereignty program is projected to mobilize up to ¥50 trillion ($347 billion) in public-private investment over the next decade to support domestic microchip production, a cornerstone of high-tech supply chains. That is an order of magnitude larger than the deal that brought Taiwan Semiconductor Manufacturing to Kyushu under Ishiba's predecessor, Fumio Kishida, and is a marker of Tokyo's new resolve on economic security. Semiconductor chips on a board (©Reuters)
Prosperity unravels when chokepoints fail.
Pandemic shutdowns idled Japanese car lines; Red Sea drone attacks recently drove 40-foot container (FEU) rates above $7,000; and the Sino‑American trade crossfire has shown how a just single bottleneck — lithography tools, gallium exports, even GPS signals — can be weaponized.
Japan, which imports 90% of its primary energy and ranks fifth in world merchandise trade, sits squarely in the blast radius.
Tokyo has reacted, but mainly with patchwork measures. The 2022 Economic Security Promotion Act created new screening powers and four programs for "Specified Important Materials," while the Japan-US Economic 2 + 2 ministerial has convened two ministerial meetings — in 2022 and 2023 — and a vice-ministerial session in 2024. What is still missing is a doctrine that converts defensive resilience into offensive relevance.
Economic security is not an elite abstraction. For shrinking economies in Japan's regions, strategic investment in semiconductors, pharmaceuticals, and green tech is a lifeline. Reliable drugs, stable energy, and high‑value local jobs turn the concept into something citizens can feel. Rapidus' factory aiming for the domestic production of next-generation semiconductors. (March 2025, Chitose City, Hokkaido)
To get the most out of its new economic-security push, Japan should take the following actions.
Create an Economic Security Council, chaired by the prime minister, integrated with the Bank of Japan and empowered to veto any FDI, ODA, or R&D project that flunks a strategic‑risk screen. The advisory body Ishiba convened in January was a start; now give its insights statutory teeth.
Ring‑fence at least 0.5％ of GDP for mission‑driven consortia in semiconductors, quantum technologies, AI‑enabled robotics, and green biotech. Tie every subsidy to technology‑readiness milestones and a commitment to reskill domestic engineers — offsetting the effects of Japan's outbound brain drain, as seen in the growing number of chip designers being recruited by South Korean and Taiwanese rivals.
Fold the Economic 2 + 2, Quadrilateral Security Dialogue (Quad) Critical‑Tech Partnership and Japan-European Union Connectivity Initiative into a Trusted Supply‑Chain Compact. Members would pool critical‑mineral stockpiles, align export‑control lists, and co‑fund strategic plants in ASEAN countries, South Asia, and Latin America — CPTPP‑plus for indispensable goods. Tokyo's planned Japan–Philippines nickel processing venture (initial budget: $350 million) could serve as the compact's first flagship.
Standards bodies, not naval fleets, will anchor tomorrow's values. Japan should leverage its Beyond 5G/6G Promotion Consortium to file joint 6G proposals with the European Union at the International Telecommunications Union ITU‑R WP 5D, chair the OECD AI‑Safety Network, and launch a Kyoto Process on cross‑border data rules. Kyoto's name recalls the city's role in value‑driven global agreements — from climate to privacy.
Full decoupling from a market that still buys one‑fifth of Japan's exports is fantasy; blind faith in benign interdependence is folly. Keep climate‑friendly consumer sectors open, close dual‑use tech and critical infrastructure. Mandate "China‑plus‑one" production for all goods under the 2022 Act and expand the Japan Bank for International Cooperation (JBIC) de‑risking facility so mid‑sized suppliers can afford to relocate.
The semiconductor start‑up Rapidus shows how it can work: the government's ¥802.5 billion ($5.6 billion) top‑up, approved on March 31, lifted total public support to ¥1.8 trillion ($12.5 billion ) and launched a 2‑nm pilot line in Hokkaido on April 1 — anchoring a critical chip node on democratic soil.
The second Trump administration's revival of America First — marked by unilateral tariffs, bilateral dealmaking and escalating demands on allies — must be met with diversification, not deference. By convening coalitions — G7 on outbound investment screening, the Quad on undersea cables, the CPTPP on digital trade — Tokyo can keep Washington inside rules‑based tents, even as the White House prioritizes transactional diplomacy. Prime Minister Shigeru Ishiba and US President Donald Trump meet in the Oval Office, the White House, on February 7. (©Prime Minister's Office) Redundancy : no single country supplies more than 20% of Japan's gallium, graphite, or antibiotics.
: no single country supplies more than 20% of Japan's gallium, graphite, or antibiotics. Re‑/ally‑shoring : domestic fabs meet 40% of chip demand; allied and like-minded partners supply the rest.
: domestic fabs meet 40% of chip demand; allied and like-minded partners supply the rest. Rule writing: Japan chairs or co‑chairs at least five working groups in the ITU, ISO (International Organization for Standardization), or IEC (International Electrotechnical Commission) by 2027.
Meet those targets and resilience becomes leverage: a nation that secures its own inputs can credibly secure them for partners, turning supply chain security into statecraft.
Economic security — once technocratic minutiae — is now the arena where great power rivalry is waged and where middle powers can still shape the outcome. Japan's manufacturing heritage, technological depth, and diplomatic dexterity prove that open societies can master chokepoints without closing their economies.
In 1949, Shigeru Yoshida rewrote Japan's grand strategy around exported goods and imported security guarantees. And in 2025, Shigeru Ishiba can update that bargain: anchor prosperity in secure, values‑based networks that Japan itself helps design. The choice is stark. Become a rule‑setter for the new era or a hostage to someone else's chokepoints.
The window to act is closing fast.
Authors: Takahiro Tsuchiya and Kazuto Suzuki
Takahiro Tsuchiya, PhD, is a professor at the Kyoto University of Foreign Studies. Kazuto Suzuki, PhD, is a professor at the University of Tokyo.
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