The Japanese concept of economic security

Published on :

13 May 2026

This fact sheet looks at Japan's approach to economic security. It begins by highlighting the way in which the country has succeeded in structuring a dedicated institutional ecosystem in recent years, then analyses the benefits and some of the limitations of this construction. It concludes by looking at the prospects for the development of Japanese economic security arrangements in a context of change at national and international level.

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Summary

Japan has long faced risks and threats to its critical supplies, and in recent years has become a pioneer in economic security, developing a range of dedicated institutional structures;

Japan's economic security policy is clearly directed against China, in particular because of the country's heavy dependence on it for supplies. The system has many benefits for Japan, in terms of government efficiency, awareness and deterrence;

The constant evolution of risks and threats is forcing Japan to constantly readjust its economic security instruments; particularly at a time when, in addition to China, the United States now seems to want to make economic coercion a key element of its strategy, including towards its traditional allies.

Background - A pioneering country in economic security

Economic security can be defined as «the ability of a nation to protect and maintain the stability and growth of its economy by strengthening its resilience in the face of both internal and external threats».»^[1]. To insist on this concept is to recognise that global economic exchanges can be both a source of shared prosperity and a source of coercion and weaponisation. Japan has recognised this for several years. One event in particular marked the country's growing awareness of economic security. In 2010, following the arrest of a Chinese trawler captain who had collided with a Japanese coastguard vessel near the disputed Senkaku Islands, China decreed a halt to exports of rare earths to Japan for several months. Subsequently, other disruptions to global supply chains reinforced the Japanese authorities' awareness of the importance of economic security: the Fukushima nuclear accident in 2011, the COVID-19 pandemic in 2020, and the Russian invasion of Ukraine in 2022.

These events were the catalyst for an overhaul of the institutional landscape dedicated to economic security. While Japan had long been implementing policies that could be likened to economic security, it now felt it necessary to integrate these measures into a coherent strategy. While promoting the idea of an open international order based on free movement, and alongside a change in its general defence posture^[2], Tokyo is setting up pioneering bodies to ensure the resilience of its economy.

There are a number of non-exhaustive examples. In 2020, the National Security Secretariat, which coordinates the government's diplomatic and security policies, will set up a unit responsible for economic security. In 2021, the government will appoint a minister specifically dedicated to this area, a world first. A Council for the Promotion of Economic Security, chaired by the Prime Minister, was set up the same year.

In 2022, the Japanese Parliament passed a law on the promotion of economic security. The law codified the powers, rights and obligations of government and private players, and focused on four key areas: the supply of essential raw materials, the security of critical infrastructures, the development of cutting-edge technologies and the introduction of a secret patent system. In 2025, the government will designate twelve product categories as critical, such as semi-conductors, batteries and aeronautical components, opening up opportunities for public subsidies to companies working in these areas.

Also in 2022, the new national security strategy fully enshrines Japan's focus on economic security, which it defines as the policy area that aims to «guarantee Japan's national interests, such as peace, security and economic prosperity, by implementing economic measures».»^[3]. The strategy includes efforts to combat economic coercion by third countries.

Japan is therefore extending the concept of economic security to many of its public policies. Generally speaking, Japan's strategy is based on two complementary pillars. The first is the’autonomy which aims to reduce the country's critical vulnerabilities. The second is the’indispensable strategy, which aims to ensure that the country is a source of essential technologies and materials for its partners.

In concrete terms, protection and support measures have been put in place in recent years. On the protection front, Tokyo is strengthening its procedures for monitoring foreign investment, particularly in critical technologies. On the support side, the government is convincing the Taiwan Semiconductor Manufacturing Company Limited (TSMC) to set up in Japan via massive subsidies. The government also grants substantial financial aid to Rapidus Corporation. Founded by eight major Japanese companies, including Toyota Motor or Sony Group, This company aims to produce next-generation semiconductors locally. Public funding covers more than a third of the capital costs of Rapidus. By diversifying where semiconductors are produced worldwide, the government hopes to make its supply chains more robust in an area where it once held a dominant position.

Finally, Japan is leading an international effort to adopt economic security measures with its partners. For example, the subject was promoted at the G7 summit in Hiroshima in 2023, at the end of which the leaders adopted the declaration «Economic resilience and economic security».

Analysis - An identified threat, and tangible benefits

The institutional focus on economic security seems to be a strategic necessity for Japan, and is aimed primarily at China. Beijing is Tokyo's biggest trading partner. There are many examples of strong dependence. The first concerns critical minerals, an area in which Japan's dependence on China is estimated at more than 50 % of its needs. For rare earths in particular, China accounts for a very large proportion of global production, as the graph below shows, and Tokyo is therefore heavily dependent on Beijing.

Dependence on China is not limited to minerals. Japan, for example, is also heavily dependent on pharmaceutical products.

As in the military sphere, Japan's economic security policy is therefore aimed directly at Beijing. The national security strategy expressly notes that an international order in which China becomes dominant would be problematic. This is all the more the case as China does not hesitate to weaponise the dependencies it enjoys. The 2010 dispute mentioned above is a textbook example of China's desire to use its dominant positions in certain value chains to exert political pressure on other countries. In January 2026, Beijing is once again introducing restrictions on the export of rare earths to Japan, in the wake of Japanese statements on the defence of Taiwan.

The Japanese government's promotion of economic security has a number of advantages for the country in a context of heightened global economic competition. Firstly, and very prosaically, the creation of dedicated organisations increases the coordination of previously scattered policies, particularly in the industrial sector, thereby strengthening the coherence of government action in this area. While the fragmentation between bodies focused on security and others focused on the economy is a source of inefficiency for inter-ministerial issues, clarifying responsibilities can only be a source of increased efficiency. It can also lead to greater adaptability of tools to changing risks and threats. Whether it's because of the increase in climatic disasters or the exacerbation of Sino-American competition - phenomena that have a strong impact on global supply chains - a country like Japan must constantly develop its economic security tools. Centralising action means we can adapt more quickly and effectively.

A second benefit may relate to raising awareness internally. Making economic security a political and institutional issue in its own right enables the government to make the country's businesses more aware of the risks and threats. By their very nature, businesses are profit-driven, without, for example, always taking into account certain dangers emanating from state competitors. In particular, small and medium-sized businesses are not necessarily aware that their intellectual property can be critical and therefore a source of covetousness. Japan's policy, which includes the creation of a dedicated ministerial post, can therefore serve as a vehicle for putting economic security issues on the agenda, reinforcing collective awareness and therefore resilience. As economic security becomes the subject of public debate in Japan, more and more companies are creating positions or departments to deal with these issues. One example is Hitachi, which has created an Economic Security Office within its External Relations Division.

A third benefit relates to a communications approach aimed at several external audiences. From the point of view of deterrence, having dedicated organisations and therefore effective response tools can discourage Tokyo's adversaries from taking coercive economic action. Alongside its military rearmament, this may enable Japan to assert a more robust posture on the international stage. What's more, Japan's economic security policy may inspire other partner and allied states, reinforcing a form of "global security". soft power Japan by disseminating a political model.

Nevertheless, the country is walking a fine line in this area. If the quest for economic security leads to excessive State interventionism in the economic sphere, this could be perceived by certain third countries as contradictory to the position of economic openness and defence of free trade promoted by Tokyo on the international scene. Japan must therefore strike the right balance between interventionist measures deemed necessary in the current context and the need to avoid alienating potential partners, and possibly encouraging retaliatory measures that could be harmful to its own economy.

Outlook - A constant need for reassessment

Economic security is a daily battle. As risks and threats evolve, so must the tools. At a time of rapid technological change and heightened global tensions, governments must strike a balance between the desire for openness and the need for economic protection. Japan, for example, is constantly developing its dedicated mechanisms, with the aim of correcting identified shortcomings. One example of a revision took place in the wake of an incident in 2023. Following a cyber-attack on the port of Nagoya that brought operations to a standstill for three days, port transport companies were added to those covered by the 2022 law's critical infrastructure protection system.

The arrival in power of Sanae Takaichi reinforces Tokyo's interest in economic security. The new Prime Minister, who was Minister for Economic Security from 2022 to 2024, announced in her inaugural speech in October 2025 that Japan must now focus on this area, and in particular on infrastructure resilience. Takaichi asked his cabinet to study the possibility of revising the law on the promotion of economic security in the light of developments in the international situation. In particular, the government wants to provide closer support in this area for Japanese companies involved in projects abroad. Japan is also planning to strengthen foreign investment control with the creation of a new dedicated body. Tokyo also wants to create a think tank specifically dedicated to the challenges of critical supply chains.

Faced first and foremost with China, Japan now seems aware of the impossibility of defining economic security instruments in isolation, apart from its economic partners in North America, Asia and Europe. Although national definitions, strategies and objectives vary, international cooperation is essential to reduce the country's vulnerability.

One of the key issues for Japan today, however, is the United States' increasingly unfavourable stance on free trade, and a new willingness on the part of the US administration to resort to economic coercion against its allies. Tokyo has not been spared the threat of tariffs since Donald Trump returned to the presidency for a second term. Alongside China's ambitions, US volatility in terms of economic openness will certainly be one of the structuring factors for Japanese economic security policy in the years to come. In this respect, Japan seems to largely share the constraints, and therefore the concerns, of the countries of the European Union (EU). So there may well be opportunities for greater cooperation.

1] Economic security in a changing world (Organisation for Economic Co-operation and Development (OECD), 2025), 9

[2] See the News sheet 36 for an analysis of the evolution of Japan's defence posture

[3] Mathieu Duchâtel, Economic Security: The Missing Link in EU-Japan Cooperation (Institut Montaigne, 2023), 11

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