Economic security has become an established concept in the present era as the return of great power competition muddles the line between security and economic issues. Governments are increasingly engaged in areas that had once seemed more the domain of private enterprise, particularly in acquisition and control over critical and emerging technologies.
Japan has in many ways been a frontrunner in economic security policy in recent years, understanding its relative shortages vis-à-vis the United States and China, and marshalling resources to enhance domestic capacity and promote cross-border cooperation with like-minded partners.
As the geopolitical situation deteriorates and countries increasingly look inward to generate national power, and with industrial policy increasingly a proxy of such debates, the Japanese government needs an overarching approach.
In 2013, the then-Abe administration developed Japan’s first National Security Strategy as the authoritative document outlining its approach to protecting the nation and as an indication of its desire to pursue “proactive”, not reactive, diplomacy like years of the past.
Today, a similar economic security strategy will clarify the nation’s policy direction under a common set of objectives.
At the moment, Tokyo’s economic security policies are best outlined via two documents. One is the Economic Security Promotion Act – defined by four pillars of supply chain resilience, securing essential infrastructure, developing cutting-edge critical technologies, and non-disclosure of patents. The other is the Ministry of Economy, Trade, and Industry’s economic security action plan, centred around the three P’s: promote (industry), protect (industry), and partner (with foreign countries).
Taken together, the two documents present a clear desire to protect and develop Japan’s indigenous industrial and technological output, while partnering with like-minded countries in areas where Japan lacks or is incapable of addressing challenges alone.
Yet the widening scope of economic security, which is itself ill-defined and difficult to define, poses an increasing challenge. The government already has separate strategies in areas such as AI, quantum computing, the bioeconomy, and semiconductors – all critical areas that arguably fall under economic security. It makes sense to integrate them into one coherent economic security strategy.
Having a coherent, authoritative document would also present a more consistent picture of Japan’s economic ambitions. For domestic audiences, it would connect seemingly dispersed policies being pursued by ministries and agencies across government under a common objective (such as subsidies under 5G promotion or corporate tax relief for manufacturing in sectors designed to promote chip production). For foreign audiences, having a comprehensive economic strategy document would assuage concerns about the intention behind measures such as mass subsidies and export controls, which some may perceive as antithetical to cooperation toward maintaining and strengthening a free and open economic order.
A lack of clarity surrounding the scope of Japan’s economic security policies is also making life hard for corporate Japan. While larger companies have started to establish economic security units within their businesses, many are unsure what constitutes economic security. This was illustrated by a Japan Chamber of Commerce and Industry survey last year showing about 75 per cent of firms only had a slight understanding of the concept. Setting out a government direction on economic security would enable strong coordination between the public and private sector to respond swiftly and aptly to the fast-changing state of affairs.
This is a critical juncture for Japan. A new prime minister has just been sworn in, while the country’s economic power is in relative decline at a time the world is leaning toward division over cooperation. Japan should send a clear message to both domestic and foreign audiences that it has a strategy to respond to rising challenges, while maintaining a measured focus on fundamental values and principles that saw the country establish its wealth.
An economic security strategy would do just that. The idea, endorsed by former Economic Security Minister Takayuki Kobayashi, also a candidate in the recent race to become president of the ruling party, would elevate the importance of economic security in Japan’s strategic thinking. It would enable the government to provide a set of guidelines from which all individual policy measures run through, creating a truly whole-of-government approach that is capable of streamlining public-private and government-to-government cooperation.
The revised 2022 National Security Strategy defined economic security essentially as the pursuit of national security via economic means. If the government recognises economic security as of equal importance to national security, it only makes sense that a second authoritative document be developed to guide Japan’s future policymaking as it related to the “pursuit of national security via economic means”.
Japan has made significant strides in tackling short- to medium-term economic security challenges through its existing framework.
The next step would be to set out a comprehensive, strategic objectives guiding Japan’s economic security approach, which in turn will inform policymaking going forward.