Japan's pick for new economic security post raises eyebrows in China

Dalian, China – China is paying close attention to moves by Japan’s new economic security minister — especially after the Oct. 31 general election — with the position expected to challenge threats posed by Beijing’s communist-led government.

The post was set up by Prime Minister Fumio Kishida, who took office on Oct. 4, as Sino-Japanese ties have soured over issues surrounding democratic Taiwan, which China regards as a renegade province that must be unified with the mainland, by force if necessary.

If the new minister, Takayuki Kobayashi, aims to craft closer ties with Taiwan than China to safeguard Japan’s economic security interests, the leadership under President Xi Jinping would take retaliatory steps against the Kishida administration, jeopardizing regional stability.

Some observers, meanwhile, say Japan might pursue a well-balanced diplomatic strategy toward China, as the country’s economy is unlikely to grow without the neighboring country’s massive market of 1.4 billion people.

China and Japan, the world’s second- and third-biggest economies, have been at odds over technology transfer, intellectual property protection, market openness and transparency as well as other trade and economic matters.

Japan’s economic security minister will be engaged in a “gargantuan task but also an urgent one given heightened regional rivalry with China,” said Jeff Kingston, director of Asian Studies at Temple University Japan in Tokyo.

The primary role of the new minister is to “develop strategies and a legal framework to enable Japan to boost economic security encompassing supply chains, resources, innovative technologies and relevant infrastructure,” he said.

Since a tit-for-tat tariff trade war intensified between China and the United States in 2018, Japanese policymakers have become more concerned about their country’s economic security since many domestic firms have expanded their businesses in the two nations.

Dozens of lawmakers from the ruling Liberal Democratic Party proposed in 2019 that the government establish an entity modeled after the U.S. National Economic Council, which coordinates economic policy advice for the president.

Last December, an LDP group — created by Kishida during his time as chair of its Policy Research Council and Akira Amari, its current secretary-general — hammered out a report on economic security.

In an apparent criticism of China, the report took the economic powerhouse to task over its contentious moves.

“Some countries have started to use economic measures to impose their own desires on other countries, and even to try to reshape the existing international order into something in favor of themselves,” it said.

Moreover, a supply chain crisis stemming from the coronavirus outbreak in China, dubbed the “world’s factory,” took a heavy toll on Japanese enterprises and consumers early last year.

In its annual trade white paper released in June, the government said nations including Japan had been spurred to strengthen economic security following the outbreak of the pandemic after it exposed the fragility of supply chains, citing the interruption of medical supplies as an example.

Immediately after the virus spread in Japan in February 2020, protective face masks and alcohol-based hand sanitizers quickly sold out at pharmacies and convenience stores.

Against the backdrop of Japan’s dependence on foreign manufacturers, the government has been also compelled to implement a strategy to enhance domestic development and production of cutting-edge semiconductors amid a global chip crunch.

Kishida pledged in an Oct. 8 policy speech to advance efforts to build a “resilient supply chain and draw up legislative bills that promote Japan’s economic security.”

“Ensuring economic security is very important for the future of Japan, as wars, in which many countries use economic weapons instead of military ones, have taken place,” a diplomat in Beijing said.

Before taking up his new post, Kobayashi, a former Finance Ministry bureaucrat, served as secretary-general of the LDP group that mapped out the report on economic security.

Within just days of his appointment, the Kishida administration decided to provide financial support for Taiwan Semiconductor Manufacturing Co. (TSMC) to build a chip-making factory in Japan in a bid to bolster supply chains for critical components such as semiconductors.

Taiwan, whose tensions with mainland China have been escalating, has welcomed Japan’s move to construct the factory in Kumamoto Prefecture, said Tai Wan-chin, a professor emeritus at Tamkang University in New Taipei City.

“Hopefully, the TSMC plant in Kumamoto will be mutually beneficial for Taiwan and Japan. It is a new area of Taiwan-Japan cooperation,” Tai said.

As China has become “more assertive,” Japanese citizens will “generally be less inclined to support a political party which advocates weak-kneed diplomacy” against the mainland, he added.

A scholar at a university in Beijing, however, said China has been “extremely irritated” by Kishida’s moves. China calls Taiwan one of its “core interests” and has demanded that Japan refrain from interfering in its “internal affairs.”

China and Taiwan have been governed separately since they split in 1949 as a result of a civil war.

“Should Japan’s economic security minister take a hard-line approach toward China and attempt to beef up cooperation with Taiwan, Beijing would carry out measures that may choke the Japanese economy,” the scholar said.

In 2010, China restricted exports of rare earths to Japan, when the two countries were at loggerheads due to competing territorial claims in the East China Sea.

China has remained Japan’s largest trading partner, with Tokyo’s reliance on Beijing for intermediate commodities exceeding 20% of imports, almost double the figure for its dependence on the United States, the nation’s top security ally.

Temple University Japan’s Kingston said, “Seeking progress through diplomacy is sensible and closing that door is counterproductive.”

The Chinese and Japanese economies are “highly intertwined and there are many overlapping interests despite the tense security situation and frosty relations,” he said.

Diplomatic sources said Kishida has already shown that he intends to emphasize ties with the mainland by tapping Kobayashi, who belongs to an LDP faction led by pro-China party heavyweight Toshihiro Nikai.