Kishida doubles down on economic security

Published : 12 Oct 2021 08:54 PM | Updated : 13 Oct 2021 01:36 PM

During the campaign for president of the Liberal Democratic Party (LDP), Fumio Kishida pledged to “secure Japan’s ‘strategic autonomy’ and ‘strategic indispensability.’” As Kuni Miyake noted in these pages last week, those phrases come from a report by the Strategic Headquarters on the Creation of a New International Order, a group that Prime Minister Kishida headed as chair of the LDP’s Policy Research Council. The report said that economic security policy is for “ensuring the independence, survival and prosperity of Japan from an economic perspective,” for “securing strategic autonomy” and for “maintaining, strengthening and acquiring strategic indispensability.”

That policy is being pursued through creation of a new minister for economic security. Kobayashi Takayuki, a former Ministry of Finance official who served as a parliamentary vice minister for defense in one of Shinzo Abe’s Cabinets, has been given that post. (He also holds the science and technology policy and space policy portfolios. Given the overlap and importance of those issues, that makes some sense, but he is going to be busy.) Kishida has also said that passage of an “Act for Promoting Economic Security” will be a priority and Kobayashi anticipates it will be tabled in next year’s ordinary Diet session.

That legislation is supposed to provide the legal framework for an economic security agenda. Kobayashi explained that the law will identify, protect and foster sensitive technologies, secure the integrity of fundamental infrastructure and strengthen supply chains.

Akira Amari, the new LDP secretary-general and one of the most powerful members of the party, regardless of title or posts, has said that the need for policy coordination throughout the government will require the new economics minister to have broad powers. “Economic security is a cross-ministry matter,” he mused, concluding that the new minister “should be able to work with every agency, including the (National Security Secretariat).” That translates more bluntly into “needs to be able to give instructions to all ministries,” an inclination that makes sense but is sure to ruffle feathers throughout the bureaucracy.

Kishida’s personality — he prides himself on being a good listener who reconciles competing views and musters consensus — will make his assertion of power difficult. In other words, talk about prioritizing economic security and using it to direct the government only makes sense if other parts of the LDP are behind it. Fortunately for him, they are.

During the campaign, Sanae Takaichi, the most hawkish of the candidates, also pledged to strengthen Japan’s economic security, a process that she framed primarily as stopping the outflow of technologies to China. Her support for this policy, along with that of Amari, signals that it enjoys considerable backing within the party and that there will be little opposition (from within the ruling coalition).

A real strategy will include defensive and offensive measures. The former includes identifying and tracking new and emerging technologies; finding and plugging national vulnerabilities; and controls on foreign direct investment, among the most obvious steps. Tokyo is doing all those things already, but in an ad hoc and piecemeal fashion. Most importantly, Japan should be working and coordinating with key trade partners through various forums, such as the “Quad,” the alliance with the U.S. or the Group of Seven.

Going on offense, Japan should promote innovation, and Kishida has said that his government will establish a ¥10 trillion university fund to promote research into advanced technologies. 

The trick is going to be funding technologies rather than companies or industries. There’s no need for heavy-handed guidance since, as Ulrike Schaede persuasively argues in her most recent book, “The Business Reinvention of Japan,” that Japanese companies are great at finding technological niches in global supply chains that allow them to flourish — they just need the resources to do so.

Yes, Tokyo should encourage supply chain resilience — but it should also check the impulse to focus on indigenous production or go too far to “keep important production infrastructure at home” (as set out in the 2021 Growth Strategy). Offshoring was spurred by a perceived sense of vulnerability, either a result of skyrocketing costs in the 1980s or because of natural disasters — businesses remember 3/11. An effective and intelligent supply chain strategy will encourage cooperation among economic and security partners and not merely focus on creating national capacity.

Prime Minister Kishida is right to insist on the “need to think about national security from a variety of perspectives, not just force.” While his predecessors have shared that mindset, there has been a more precise definition of economic security concerns in recent years and an intensification in focus. The new administration is prepared to go still further. Those efforts are to be applauded. But Japan’s new government, like that of like-minded administrations elsewhere in the world, must also remember that there is strength — and security — in numbers. Achieving “strategic indispensability” is only possible in the context of relations with other countries. Excessive nationalism, no matter what the supposed justification, will undermine its security.

Brad Glosserman is deputy director of and visiting professor at the Center for Rule-Making Strategies at Tama University. Source: Japan Times

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