Japan focuses on economic resilience, technology safeguards to bolster national defense

Tom Abke

With geopolitical pressures growing, Japan is reshaping its national defense with a focus on economic resilience and technological independence. Through initiatives such as the Economic Security Promotion Act (ESPA), Tokyo aims to shield critical technologies, secure supply chains and protect essential infrastructure from foreign interference. The shift is integral to Japan’s national security strategy, where economic stability is central to safeguarding against potential vulnerabilities and fostering stronger relationships, especially with longtime ally the United States and other Indo-Pacific partners.

Several “critical junctures” in Japan’s recent history have accelerated the evolution, Stephen Nagy, an international relations professor at Japan’s International Christian University, told FORUM. In 2010, after Japan countered illegal fishing in its waters by a People’s Republic of China (PRC) vessel, Beijing imposed informal embargoes on exports of critical minerals to Japan, underscoring the vulnerability of Japan’s supply chains, he said. Similar disruptions were later spurred by the PRC’s arbitrary territorial claims to the Japan-administered Senkaku Islands in the East China Sea.

More recently, the COVID-19 pandemic exposed global supply chain fragilities, prompting Tokyo to adopt “economic security and resilience as a core principle in national defense,” Nagy said.

Ongoing implementation of the 2022 ESPA focuses on securing resources and technology essential to Japan’s economy and defense. The act contains four pillars to protect Japan’s autonomy against economic coercion: ensuring critical materials, protecting infrastructure, advancing technology and safeguarding patents.

Coordination between Japan’s ministries of defense, and economy, trade and industry (METI) is central to implementation. By aligning economic policies with defense strategies, METI oversees initiatives to diversify supply chains away from the PRC and mitigate risks associated with potential regional conflicts.

Recognizing Beijing’s growing willingness to use “economic coercion and other hybrid tactics to pursue foreign policy objectives,” METI is establishing alternative supply routes in Southeast Asia, South Asia and Central Europe, Nagy said. Such measures would be crucial should conflicts arise over the PRC’s threats to annex self-governed Taiwan or its territorial incursions in the South China Sea, which could disrupt trade routes vital to Japan’s economy and global commerce.

METI has developed policies to encourage domestic production of essential technologies and commodities, including semiconductors and energy storage systems, reducing Japan’s reliance on overseas production hubs. The strategy mirrors the U.S.’s National Defense Industrial Strategy, which emphasizes a diversified, resilient industrial base.

The ESPA establishes frameworks to safeguard Japan’s technology and intellectual property, including limiting disclosure of patents related to national security. That reduces the risk of tech theft — a pressing concern given the widespread accusations of cyber espionage directed at Beijing.

The act also mandates substantial investments in Japan’s critical supply chains. METI has allocated more than $12 billion for domestic research, development and production of essential materials, such as semiconductors and high-performance batteries. Japan’s Defense Ministry reported in June 2024 that it is collaborating with the U.S. Defense Department to ensure supply chain resilience, with bilateral teams focused on missile production and aircraft maintenance.

Given its significant trade with the PRC, Japan’s nuanced and pragmatic approach – known as “de-risking” – seeks to avoid dependency on Beijing while balancing economic ties with security concerns, Nagy said.

Tom Abke is a FORUM correspondent reporting from Singapore.