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Japan forges closer politics-bureaucracy-private sector ties to brace for era of economic security

On June 2, Prime Minister Shinzo Abe told Liberal Democratic Party (LDP) tax policy chief Akira Amari, who visited the Prime Minister’s office, “This is a very important issue, so please go ahead with discussions within the party.”


Amari was telling the prime minister about international and domestic discussions over economic security policy for the post-coronavirus era. The prime minister made the aforementioned remark when Amari was explaining China’s move to advance its digital hegemony in areas connected with its “Belt and Road” initiative to create an extensive economic zone.


The government established an economic division in the National Security Secretariat (NSS) in April in response to the intensifying battles for technological supremacy between the U.S. and China, and those between other nations in the world.


In May, the U.S. extended the effectiveness of an executive order banning the procurement of high-risk communications equipment made overseas by one year, with an eye on limiting Chinese equipment purchases.


In China, the internet security law (cybersecurity law) requires domestically collected customer data to be kept within the country and undergo screening by authorities if the data needs to be brought out of the country.


Japan will fully implement the revised Foreign Exchange and Foreign Trade Act on June 7 in a bid to place stronger restrictions on foreign investments in Japanese companies critical to national security. But Japan is not fully prepared in systems or human resources compared with the U.S. and Europe.


The U.S. and Europe have established the “security clearance (eligibility evaluation)” system ahead of other nations to allow access to highly sensitive information only to individuals who have been deemed free from risk of leaking information.


Japan’s system to protect sensitive information may be regarded as insufficient without this system. A government source says, “[The absence of the system] could hinder joint research projects on quantum computers and artificial intelligence (AI) between Japan and the U.S. in the future.”


Masahiko Hosokawa, a specially appointed professor of Chubu University and former director general of the trade control department at the Ministry of Economy, Trade and Industry (METI), says: “Previously, Japan could do business without a strong sense for security. But the country will have to focus not only on efficiency but also on risk diversification going forward.”


Economic security policymaking led by the Prime Minister’s office [Kantei] has become conspicuous since around the end of 2018. All government agencies agreed not to procure information or communications equipment that raises security concerns, including information leakage, and started to share a sense of crisis.


The Ministry of Foreign Affairs (MOFA) set up the “Emerging Security Challenges Division” to deal with economic security policy in October 2019, but the ministry had only a few staff members who were familiar with the issue. So it invited Akira Igata, a visiting professor of Tama Graduate School of Business and an economic security expert, as a part-time employee to seek policy proposals, including the analysis of overseas trends and the ideal trade control system. 


METI, which deals with the export control issue with South Korea, also launched an “economic security office” in June 2019. The ministry’s chiefs and section chiefs at various bureaus serve as members of the office. A senior METI official says, “The concept of economic security has been widely recognized and that recognition heightened momentum for the entire ministry to work on the issue.”


The appointment of senior officials to international organizations that deal with common issues for the international community, such as trade, investment, and the protection of intellectual property rights, is also directly linked to Japan’s economic security. Previously, MOFA played a central role in drafting a personnel plan, but the government will newly involve the [NSS’s] economic division, which is directly controlled by the Kantei, and the Cabinet Bureau of Personnel Affairs.


China holds significant influence over international bodies. Currently, Chinese nationals chair four of the 15 specialized UN agencies. A senior official of the Cabinet Secretariat says, “We need a medium- to long-term personnel strategy to contain China’s influence.”


In Japan, there are few opportunities for the public and private sectors to discuss economic security. Neither does the country possess a think-tank that can make policy proposals in this area as the U.S. does. The government needs to carefully explain the objectives and background of policies to companies, and the business community needs to make continuous efforts to reflect the security situation in corporate management.


Solidarity among the politics, bureaucracy, and private sector will become a major premise for surviving the new era of economic security.


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