Just four decades ago, many saw Japan as the successor to the United States as the world’s “number one.” Ezra F. Vogel wrote in his famous 1979 book, Japan as Number One, that “Japan has dealt more successfully with more of the basic problems of postindustrial society than any other country.” As its economy continued to expand, anxieties about the “Japanese threat” became increasingly palpable. Ronald Reagan had to abandon the tenets of free trade to protect the U.S. auto sector1 and semiconductor industry.2 In 1988, a Gallup poll found more Americans feared the Japanese economy than Soviet nuclear weapons. In 1991, the sensational book The Coming War with Japan appeared, a testament to the opinion of the time.
Following the bursting of Japan’s economic bubble and the subsequent “lost decade,” the Asian Financial Crisis, and the country’s accelerating demographic decline, Japan faded from global attention. It came to be seen primarily as an aging and complacent society.
The Asian Financial Crisis of 1997–98 is often considered to mark the end of the Asian developmental state, certainly in Japan.3 Yet this interpretation was always misleading. South Korea, for instance, began dismantling its developmental state in the early 1990s, before the debt had even begun to build up. Meanwhile, comparing the experience of Taiwan and South Korea, Elizabeth Thurbon argues that the former was immune to the crisis precisely because it did not, unlike Korea, abandon the logic of developmentalism.4 In the case of Japan, as Ha-Joon Chang explains in Kicking Away the Ladder, the recession that the country faced had less to do with its developmental approach and more “with factors like structural savings surplus, ill-timed financial liberalization (which led to the bubble economy) and macroeconomic mismanagement.” Although few suspected it at the dawn of the “end of history,” Asia’s developmental states—Japan included—would revive in the new millennium.
The onset of the second decade of the twenty-first century brought new tumults to Japan. China’s increasingly assertive stance on the global stage led to heightened tensions between the two nations, particularly over the disputed Senkaku Islands. In 2010, Japanese authorities detained the captain of a Chinese fishing boat that had entered its territorial waters, prompting Beijing to retaliate by imposing a ban on the export of rare earth minerals.5 Keep in mind that products which include rare earths account for more than 20 percent of the value of Japan’s exports. China’s embargo contributed to extreme price volatility: in 2011, prices of rare earths soared nearly 2,700 percent from their level of two years prior.6
In 2010, the same year that Japan recognized its acute vulnerability toward China, the latter surpassed it to become the second-largest economy in the world and the dominant economic power in Asia. This marked a turning point for Tokyo, which now faced the daunting challenge of responding to Beijing’s quest for regional hegemony. It was Shinzo Abe who emerged as the leader capable of articulating a strategic response to these developments. As Michael Green writes in Line of Advantage: Japan’s Grand Strategy in the Era of Abe Shinzō, his “political comeback was largely fueled by public alarm at China’s increasing use of coercion against Japan and the belief among Liberal Democratic Party (LDP) leaders that Abe alone possessed the experience and clarity of thinking to restore Japan’s position in Asia.” Abe pulled together scattered reform proposals and initiatives into a new synthesis, renewing Japan’s neomercantilism in a form adapted to the novel geoeconomic circumstances.
Abe’s best-known reforms are referred to as “Abenomics.” Their main goal was to rekindle the growth of the Japanese economy through a mix of monetary stimulus, regulatory reform, and flexible fiscal policy. And while Japan’s economy managed to achieve a long growth streak during the Abe years, it was still sluggish, averaging 1.1 per cent per annum. Abe’s real achievements, however, lie beyond headline growth statistics.
Abe’s Synthesis
As Wolfgang Streeck notes in The Origins of Nonliberal Capitalism, the Japanese model depends “critically on state elites who were capable, in extraordinary political moments, of strategic, autonomous, and authoritative action.” After 2010, Japan’s elites proved they could adjust to new pressures.
China’s aforementioned restriction of rare earths exports was a pivotal moment. Tokyo found itself face to face with the Chinese developmental state, which used the tools at its disposal to gain dominance in a strategically sensitive area. Chinese state-sponsored research into rare earths began in the 1980s, and by 1985 more than three hundred research institutions were already working on the processing and applications of these minerals. A year later, the first major document granting strategic importance to these resources, the National Five-Year Plan for Rare Earth Industry (1986–90),7 went into effect. Thanks to focused state efforts, China managed to make the leap from a small producer and exporter in the 1990s to controlling the entire value chain and achieving a quasi-monopolistic position in the 2000s.8 Large companies like Shenghe—with clear ties to the Chinese state9—were buying up projects around the world, limiting other countries’ room for maneuver. The CCP still follows the maxim reportedly coined by Deng Xiaoping: “The Arabs have oil, we will have rare earths.”
The Japanese state took appropriate steps immediately after the embargo. Directed by the Ministry of Economy, Trade and Industry (successor to the Ministry of International Trade and Industry, which was vital to Japan’s postwar development strategy10), Japan Oil, Gas and Metals National Corporation, or jogmec, has made securing rare earth supply chains its highest priority. Already during the Abe premiership, it succeeded in reducing Japan’s dependence on China from 90 percent to 58 percent of its supply11 (with a goal to further reduce it to under 50 percent by 202512). In a telling contrast, the United States reacted to China’s export curbs by launching an investigation through the WTO, while Brussels created a study group to examine the issue.
In the West, rare earths mining projects are hardly attractive to private capital. Field explorations alone can cost tens of millions of dollars, there is no guarantee of success, and it can take as long as ten to twenty years from investment to reach operational capability.13 State assistance is indispensable to meeting investor hurdle rates.
Australia’s Lynas is one of the few competitors to China’s dominance in rare earths processing. In 2011, Japan rescued Lynas from bankruptcy by lending the company $250 million; in 2016, it provided further loans, again saving the Australian company from going under.14 Had it not been for Tokyo’s swift action in 2011, the Pentagon would not have been able to sign an agreement with Lynas in 2020 with the intention of building a processing plant in the United States.15
The shortcomings of Western models, in comparison to those of Japan or China, lie in the fact that neither the United States nor the EU possess the necessary institutions to effectively compete in the rare earths market. In America, the U.S. Geological Survey deals with critical minerals, but has no capital to support projects in this domain. Similarly, the EU’s innovation council focuses on research rather than investment.16 The scramble for mining projects between Beijing and Tokyo has already led to a situation where most of the deposits are divided between the two via offtake agreements.
The Japanese state pours funds into projects worldwide, but is also investing in new technologies. In 2022, the Diet voted to allocate $44 million for an initiative to extract rare earths from the seabed, with work scheduled to begin in 2024.17 Japan is also encouraging efforts to improve recycling processes, which may be one of the few ways to manage potential price volatility in rare earths in the future.18
Abe’s Neomercantilism
While Abe attempted to find engines of growth outside the country and anchor the national economy in Asia, this idea had previously emerged in the 1990s among elites who sought to revitalize the Japanese model. In the early 1990s, Japanese elites continued to believe in the vitality of the developmental state, and engaged in an ideological dispute with the International Monetary Fund. In 1991, the Overseas Economic Cooperation Fund, Japan’s largest aid institution at the time, issued a report criticizing the neoliberal rationale on which IMF recommendations were based. For Japan’s neomercantilists, the cause of economic instability in East Asia was a fragile industrial base, not insufficient financial deregulation or limited privatization. MITI provided advice on industrial strategy to East Asian states, especially Indonesia and Vietnam, and promoted its ideas by publishing a multivolume history of industrial policy in Chinese in 1992. The ministry continued to put emphasis on the expansion of economic cooperation, as it was hoped that Japanese growth would gain new momentum in synergy with other countries in the region.
Later in the 1990s, however, the image of Japan’s developmental state was unravelling. In the rivalry with the IMF, Tokyo was too risk averse. As Hidetaka Yoshimatsu recalls, in 1997, when the Thai finance minister floated the idea of organizing a rescue package outside the IMF framework, Japan rejected this suggestion and urged Thailand to seek an agreement with the Fund.19 Corruption scandals in the late 1990s further tarnished the prestige of the Japanese model.
Around the same time, Japan abandoned the mercantilist aid model to align itself with Western, liberal standards. The focus shifted from state-led, large-scale development projects to humanitarian aid and poverty alleviation, with a simultaneous transition from loans to grants. It was only under the second Abe government, and under pressure from China, that Japan reverted back to its old model.20
Indeed, it is possible to argue that the Belt and Road Initiative represents a large-scale implementation of Japanese ideas from the 1990s. Xi Jinping announced the BRI in 2013, launching a competition for infrastructure investment in Asia. The rivalry escalated in 2015, when Japan lost a bid for a high-speed rail project in Indonesia.21 Abe unveiled the Partnership for Quality Investment in that year, in response to China’s launch of the Asian Infrastructure Investment Bank. Although Japan is reluctant to admit that the PQI is an attempt to counter the BRI, the competition is taken seriously by Japan. In 2020, Tokyo secured 240 infrastructure projects in the region, investing $367 billion, compared to Beijing’s $255 billion across 210 projects.22
States seeking to hedge against subordination to Beijing welcome Japanese loans and support. Among Japan’s big projects are a subway in Manila, a new container terminal in Cambodia, and, most notably, the East-West and South Economic Corridors, which are designed to enhance connectivity in the Mekong region. Indonesia, which is growing in importance due to its potential in rare earth mining and processing, can count on loans from Tokyo for a mass rapid transit project in Jakarta and for expressways that will connect the country’s capital to the port of Patimban. What makes Japanese projects more attractive than Chinese ones is not only their quality but, above all, the availability of favorable loans—long-term, on average for thirty years, with low interest rates of around 0.25 percent per annum.23
According to some critics of the developmental state, as the communist threat disappeared, Japanese corporations “went global,” and ties between government and business have loosened considerably, reducing the influence the state has over the behavior of companies (or even, some argue, rendering developmental agencies powerless24). The end of the Cold War also meant that America no longer had to tolerate25 a concentrated model of economic and political power.26 Today, the interests of the state and the private sector are divergent, if not outright antagonistic, the argument goes. Nevertheless, the neoliberal coalition of interests appears to be weakening, as evidenced by PQI. Hironori Sasada observes that expectations among Japanese corporations for overseas infrastructure projects are immense. As Keidanren (Japan Business Federation) announced: “We need to promote infrastructure system exports to emerging countries, including those in Asia, as this strengthens host countries’ basis for growth and creates greater market demand, and that in turn contributes to the growth of our economy.”27 Given that investment by the domestic construction industry has fallen considerably since the 1990s, and taking into account Japan’s deteriorating demographics, the relationship between the government and the construction sector is destined to be closer.
These developments seem to confirm Linda Weiss’s previous prediction that, while Japan’s developmental state used to cooperate with a weak industry, it will increasingly cooperate with a strong one. This does not imply a weakening of the state itself. Instead, we are seeing what Weiss has called “governed interdependence,” where a strong industrial sector and a strong state are developing new patterns of collaboration.28
Japan and the United States
For all his talk of a “pivot,” Barack Obama was not eager to engage in geoeconomic statecraft in Asia, and consequently had trouble keeping American allies from joining China’s Asian Infrastructure Investment Bank. President Biden continues Obama’s approach. The Indo-Pacific Economic Framework doesn’t involve any investment, and the focus of the Partnership for Global Infrastructure and Investment is primarily on Africa and South America.29 The European Union’s alternative to the BRI, the Global Gateway program, has, in the words of analyst Noah Barkin, become “a poster child for Brussels dysfunction.”30 The initiative was controversial within the Brussels bureaucracy for being too antagonistic toward Beijing. While there is talk of a $300 billion fund, it remains unclear how much of the money constitutes new funding and how much involves repackaging existing projects under a new label.
Thus, the ambitions of Chinese neomercantilism in Asia were only seriously countered by Japanese neomercantilism, embodied in PQI. Similarly, when Trump withdrew the United States from the Trans-Pacific Partnership (TPP), Abe played a key role in salvaging the agreement, resulting in the creation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (cptpp).
The free trade agreement, however, did not mean that Japan converted to unbridled liberalism. Tokyo managed to get the most favorable terms possible when it came to accessing politically charged markets like agriculture. As Saori N. Katada remarked in Japan’s New Regional Reality,
METI undoubtedly understood how, as part of the government’s regional trade strategy, the TPP would strengthen Japan’s position to leverage trade, as the competitive pressures of market access and rule setting would motivate potential FTA partners such as the European Union or China to become more actively engaged with Japan. METI’s strategy worked. China’s concerns over being excluded from the regional trade regime as the region divided between TPP and nonTPP groups led China to shift its policy toward accommodating Japan’s preferences. Since 2011 both countries have more actively engaged in the three-country FTA among China, Japan, and South Korea.
Shaping the rules in East Asia is therefore intended not only to establish engines of growth in the region, but also to influence China’s behavior.
More broadly, the second Abe government put an end to the era of the Yoshida Doctrine. This policy line, named after Prime Minister Yoshida Shigeru, focused on leveraging the U.S. security umbrella and prioritizing domestic growth, while reducing international ambitions to “karaoke diplomacy.” Japanese policymakers became accustomed to making decisions in response to international pressure, primarily from Washington. This ingrained acquiescence has even earned its own name: “gai-atsu” (foreign pressure).31 Such an attitude might have been viable in an era when the United States was the undisputed hegemon, but it no longer seems possible in today’s Asia, as China has abandoned Deng Xiaoping’s “hide and bide” philosophy.
According to Michito Tsuruoka, the debate around Japan’s foreign policy roughly pits two camps against each other.32 Both realize that Japan is no longer operating in a low-threat world, but they differ on the approach to be pursued. Supporters of “Japan First” are convinced that there is not much time to spare. Not only should the defense budget grow much faster, but all resources should be focused on the immediate security environment. In this view, building relationships with countries other than the United States is a waste of energy. Backers of the “Global Japan” strategy believe, on the contrary, that fostering close ties with both regional and global partners is necessary to meet security threats.33
Abe, and now Prime Minister Fumio Kishida, rank among the advocates of “Global Japan.” They envision not only building a global coalition to maintain the status quo in East Asia but also projecting the economic and investment clout of the state to provide Japan with a new footing for development.
At the core of relations between Japan and America lies the issue of extended deterrence. The nuclear option—technically within Tokyo’s reach34—makes many Japanese feel uneasy. Nevertheless, they may have no choice but to quietly come to the same conclusion as Britain and France did after the Second World War.35
It’s noteworthy, as Tobias Harris points out, that Prime Minister Kishida paid tribute to Henry Kissinger, despite the latter’s relative lack of interest in Japan.36 The author of Diplomacy, however, supported the idea of independent deterrents in the hands of regional powers aligned with the United States. In 1969, according to Seymour Hersh, Nixon and Kissinger hinted to the Japanese that they would understand if Tokyo developed its own nuclear weapons. In his final interview, the late secretary of state mentioned that Washington would face a test of pragmatism in response to Japanese aspirations to acquire their own deterrent.37
Another aspect of Japan’s “pro-American independence”38 policy involves shaping Washington’s attitudes to elevate the importance of Japanese security within U.S. strategy. Initially floated in Japan in 2006, Abe formally announced a strategy of “Free and Open Indo-Pacific” (FOIP) in 2016. The FOIP has become a central pillar of Japan’s foreign policy, with Prime Minister Kishida prioritizing its implementation and committing to allocate $75 billion in official development assistance (ODA) within the framework by 2030.39 In 2019, the United States followed suit, issuing its own formulation of FOIP, which, as Green notes in Line of Advantage, closely follows the Japanese one.
Converging policies indicate the success of the Abe administration in pressuring Washington, with the aim of securing U.S. support in the event of “gray zone” scenarios. Bear in mind that there are more American soldiers stationed in Japan than in any other allied country, and during the Abe years, the scope of U.S.-Japan defense cooperation only expanded.40 Thus, the United States has been brought into the so-called Senkaku Paradox,41 the risk of a great power confrontation for low stakes—a string of uninhabited islands.
Another breakthrough occurred in 2015, with the reinterpretation of the constitution to restore Japan’s full “collective self-defense” capability. The Abe government not only raised the defense budget (and Kishida is continuing in this direction),42 but lifted bans on providing arms and military support to other countries in the region, as one of the goals of FOIP is building capacity in East Asia. The Japanese government called this a “pro-active contribution to peace.” This policy seems to match the public sentiment: in 2022, a record high share of respondents—40 per cent—said Japan’s Self-Defense Forces should expand their ranks. According to another survey, an overwhelming 86.2 percent of the Japanese public—also a record high—answered affirmatively to the question of whether Japan could be drawn into war in the future.43
In 2022, the Kishida government decided to develop a long-range strike capability, planning to create ten types of missiles. This constitutes another major strategic shift. Discussions about equipping Japan with this kind of counterstrike capability have been ongoing since the end of the Cold War. It was not until 2014, however, under Prime Minister Abe, that the conditions under which Japan might adopt this solution were clearly articulated. In the latest National Security Strategy, long-range missile capabilities were identified as the cornerstone of future deterrence. Meanwhile, Japan is in the final stages44 of purchasing Tomahawk missiles45 to defend its remote islands. Without missiles of its own, Tokyo would be dependent on Washington and would need to request a strike on its behalf.
The armaments sector will present an opportunity to assess whether the Japanese developmental state can still effectively mobilize its industry. Tokyo wants to reduce its dependence on foreign countries in this domain, although it may prove difficult, as many Japanese companies have in recent times either ceased or substantially reduced production of military equipment, despite the new developments.46 Prime Minister Kishida, however, has made clear his desire for deeper state involvement in the arms sector. The government would fund the most capital-intensive elements by building and leasing factories, while assigning manufacturers to produce the requested weaponry.47
Japan’s 2022 National Security Strategy places special emphasis on economic security. A key tool for implementing this strategy is the Economic Security Promotion Act, passed in 2022. It targets four main areas: supply chain resilience,48 critical infrastructure, critical technology development,49 and prevention of patent outflow.
Significant actions taken under the framework of the Economic Security Promotion Act (ESPA) include the introduction of more rigorous screening processes for foreign students and researchers, the strengthening of export controls, and the initiation of stockpiling critical resources, such as antimicrobials and fertilizers.50 Particularly noteworthy is the subsidy mechanism for companies that establish supply chains for critical materials. To qualify for government support, a company must demonstrate that the material is essential for national survival, that there is a high dependency on foreign countries for its supply, and that the supply chain is susceptible to disruptions.
The revived developmental state51 is set to face two other major challenges. On the technology front, METI has taken a page out of its old playbook and is coordinating a collaboration between Sony, SoftBank, and Toyota around the Rapidus project to develop advanced semiconductors.52 The goal is to manufacture two-nanometer chips by 2027. Tokyo is trying to give a boost to its chip sector through generous funding and promises of further subsidies. The last attempt of this kind—Elpida Memory,53 created from the government-backed merger of the Hitachi and NEC semiconductor divisions in 1999—failed miserably. Nevertheless, as Akira Amari, the so-called chip minister, declared, in an effort to reduce dependence in this key sphere, the Japanese “have no choice but to take on this challenge, regardless of the outcome.”54
Although success remains uncertain, Japan has already succeeded in attracting important foreign investment into its chip sector. U.S.-based Micron, a memory chip manufacturer, has announced a $3.7 billion investment in a Hiroshima factory; similarly, Samsung has revealed plans to establish an R&D center near Tokyo. Perhaps the most significant achievement may be attracting TSMC, which inaugurated its first factory in Kumamoto on February 24 and has already initiated construction of another. According to Nikkei, the Taiwanese company is seriously considering the establishment of a third facility to produce three-nanometer chips.55
Japan represents an attractive option for TSMC, because it has managed to preserve a comprehensive semiconductor supply-chain ecosystem. Additionally, Japanese contractors are less expensive and more efficient than their American counterparts (consider that the Taiwanese company had to dispatch its managers to “rescue” its Arizona project56). The Kumamoto factory was constructed in just twenty months, significantly less than the average of three years reportedly required for similar facilities in the United States.57 Lastly, the Japanese government is actively working to ensure that the company benefits from subsidies.58
The second challenge facing the revived Japanese developmental state concerns energy independence. A Western-style green energy transition will not work in Japan, given its limited land area and dense population. Today, Japan is the largest importer of LNG59 and the third-largest importer of coal in the world. The price to be paid for abandoning nuclear may well be sacrificing energy independence, a cost that may no longer be tolerable. In 2022, Kishida announced the construction of new reactors in a move that reversed the post-Fukushima policy (after 2011, Tokyo shut down twenty-four reactors).60 For years, nuclear energy had little public support, yet around 60 per cent of Japanese are now in favor.61 The government also aims to implement a national strategy on nuclear fusion, leveraging cooperation between the state and the private sector.62
The Quiet Avant-Garde
Defying its decades-old image as a stagnant and declining power, Japan seems to be displaying unexpected dynamism in recent years. In its efforts to confront China, Japan’s leaders have been willing to break old political habits, as demonstrated by resolving tensions with Korea63 and by overcoming resistance to nuclear energy, and perhaps weaponry.64 Historically, the country has shown a remarkable ability for transformation during periods of geopolitical disruption. This was evident during the Meiji era and then following the defeat in 1945. Today, as China continues to rise, Japan finds itself at a critical juncture, once again poised to undergo significant changes.
Tarō Asō, minister of foreign affairs in the first Abe government and finance minister in the second, stated that Japan “is a country that has been grappling with various issues at an earlier time than others and adopting approaches that continue to set an example.”65 Although often unnoticed in the West, Japan has quietly been at the policy avant-garde in adjusting to a new world of geoeconomic and geopolitical competition. Other countries, in order to respond to new challenges, might once again look to follow its example.
This article originally appeared in American Affairs Volume VIII, Number 2 (Summer 2024): 170–84.
Notes
1 Wells King and Dan Vaughn Jr., “
The Import Quota That Remade the Auto Industry,” American Compass, September 29, 2022.
2 Bill Johnstone and Joseph Palca, “World Trade War Looms over Microchip Accord,” Nature 325, no. 747 (1987).
3 Eul-Soo Pang, “The Financial Crisis of 1997–98 and the End of the Asian Developmental State,” Contemporary Southeast Asia 22, no. 3 (December 2000).
4 Elizabeth Thurbon, “Two Paths to Financial Liberalization: South Korea and Taiwan,” Pacific Review 14, no. 2 (2001): 241–67.
5 Keith Bradsher, “Amid Tension, China Blocks Vital Exports to Japan,” New York Times, September 22, 2010.
6 Marc Schmid, “Mitigating Supply Risks through Involvement in Rare Earth Projects: Japan’s Strategies and What the U.S. Can Learn,” Resources Policy 63 (2019): 101457.
7 Jane Nakano, “The Geopolitics of Critical Minerals Supply Chains,” Center for Strategic and International Studies, March 11, 2021.
8 Nabeel A. Mancheeri et al., “Effects of Chinese Policies on Rare Earths Supply Chains Resilience,” Resources, Conservation and Recycling 142 (2019): 101–12.
9 Mary Hui, “A Chinese Rare Earths Giant Is Building International Alliances Worldwide,” Quartz, February 19, 2021.
10 Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975 (Stanford: Stanford University Press, 1982).
11 Mary Hui, “Japan’s Global Rare Earths Quest Holds Lessons for the US and Europe,” Quartz, April 23, 2021.
12 Ryosuke Hanafusa, “Japan to Pour Investment into Non-China Rare-Earth Projects,” Nikkei Asia, February 15, 2020.
13 “Japan to Boost Public Funding for Rare Earth Exploration,” Nikkei Asia, April 12, 2021.
14 Mary Hui, “Lynas Is Shaking Up the Supply Chain for Rare-Earth Metals,” Quartz, March 6, 2021.
15 Fawad Mai, “Lynas JV Awarded Initial Funding for Designing US Rare Earths Facility,” S&P Global Market Intelligence, April 22, 2020.
16 Hui, “Japan’s Global Rare Earths Quest Holds Lessons for the US and Europe.”
17 “Japan to Begin Extracting Rare Earth Metals from Seabed in 2024,” Nikkei Asia, December 24, 2022.
18 Hetong Wang et al., “China’s Electric Vehicle and Climate Ambitions Jeopardized by Surging Critical Material Prices,” Nature Communications 14, no. 1246 (2023).
19 Hidetaka Yoshimatsu, “Japanese Policy in the Asian Economic Crises and the Developmental State Concept,” Journal of the Asia Pacific Economy 8, no. 1 (2003): 102–25.
20 Hironori Sasada, “Resurgence of the ‘Japanese Model’?: Japan’s Aid Policy Reform and Infrastructure Development Assistance,” Asian Survey 59, no. 6 (2019): 1044–69.
21 Gabriel Dominguez, “Why Japan Still Leads in Southeast Asian Infrastructure Investment,” Japan Times, December 6, 2022.
22 William Choong, “Japan’s Indo-Pacific Strategy in Southeast Asia: Floundering, Not Foundering,” ISEAS Yusof Ishak Institute, May 6 2020.
23 Dominguez, “Why Japan Still Leads in Southeast Asian Infrastructure Investment.”
24 S. Javeed Maswood, “Developmental States in Crisis,” Reconfiguring East Asia: Regional Institutions and Organisations after the Crisis, ed. Mark Beeson (London: Routledge Curzon, 2002).
25 Walden Bello, “East Asia: On the Eve of the Great Transformation?,” Review of International Political Economy 5, no. 3 (Autumn 1998): 424–44.
26 In the 1990s, America successfully pressured Japan to reduce its tariffs and barriers to FDI. Western companies have gained a foothold in the country and Japanese capital has internationalized, while ties within the keiretsu have loosened. See Richard Stubbs, “The East Asian Developmental State and the Great Recession: Evolving Contesting Coalitions,” Contemporary Politics 17, no. 2 (2011): 151–66.
27 Sasada, “Resurgence of the ‘Japanese Model’?: Japan’s Aid Policy Reform and Infrastructure Development Assistance.”
28 Linda Weiss, “Governed Interdependence: Rethinking the Government‐Business Relationship in East Asia,” Pacific Review 8, no. 4 (1995).
29 White House, “Partnership for Global Infrastructure and Investment at the G7 Summit,” news release, May 20, 2023.
30 Finbarr Bermingham, “4 Lost Years: How the EU Fumbled Its Response to China’s Belt and Road with Global Gateway Strategy,” South China Morning Post, October 24, 2023.
31 Y. A., “The Virtues of a Confrontational China Strategy,” American Interest, April 10, 2020.
32 Michito Tsuruoka, “Japan First versus Global Japan,” National Interest, January 14, 2018.
33 Western observers’ perceptions of “Global Japan” as the predominant camp may be misguided, as they mostly interact with its proponents—individuals already selected for more outward-looking orientation and proficiency in English.
34 Mark Fitzpatrick, “How Japan Could Go Nuclear,” Foreign Affairs, October 3, 2019.
35 Krzysztof Tyszka-Drozdowski, “The Coming Age of Nuclear Opacity,” American Affairs 6, no. 3 (Fall 2022): 113–25.
36 Tobias Harris, “Kissinger and Japan,” Observing Japan (Substack), December 3, 2023.
37 “Henry Kissinger Explains How to Avoid World War Three,” Economist, May 17, 2023.
38 Hirotaka Watanabe, “International Politics and Japanese Diplomacy as Seen from Eurasia: An Approach to ‘Geopolitical Economics’ and ‘Global Governance,’” Diplomacy no. 57 (March 31, 2020).
39 Prime Minister Kishida Fumio, “New Plan for a ‘Free and Open Indo-Pacific’” (speech, Ministry of Foreign Affairs of Japan, March 20, 2023).
40 Lindsay Maizland and Nathanael Cheng, “The U.S.-Japan Security Alliance,” Council on Foreign Affairs, November 4, 2021.
41 Michael E. O’Hanlon, The Senkaku Paradox: Risking Great Power War over Small Stakes (Washington, D.C.: Brookings Institution Press, 2019).
42 “Japan’s Parliament Enacts Record ¥114 Trillion Budget for Fiscal 2023,” Japan Times, March 28, 2023.
43 Takahashi Kosuke, “Poll: Japanese Support for Self-Defense Forces Rises to Record High,” Diplomat, March 7, 2023.
44 Michitaka Kayia, “Japanese Government Finalizes Negotiations to Purchase U.S. Cruise Missile Tomahawk,” Yomiuri, October 28, 2022.
45 Kisho Yoshida, “Acquiring Counterstrike Capabilities Is No Simple Matter for Japan,” Japan Times, December 14, 2023
46 Tim Kelly and Kaori Kaneko, “Japan Battles to Persuade Big Brands to Help with Military Expansion,” Japan Times, March 26, 2023.
47 Rena Sasaki, “Japan Needs a Defense Industrial Revolution,” Foreign Policy, March 9, 2023.
48 Tokyo has identified eleven categories of goods that are already eligible for government support: semiconductors, rare earths, medical supplies, fertilizers, ship parts, liquified natural gas, aircraft parts, cloud applications, antimicrobials, storage batteries, industrial robots, and machine tools.
49 The Japanese government has identified the following technologies as critical: biotechnology; medical and public health technology; artificial intelligence and machine learning; advanced computing, microprocessor, and semiconductor technology; data science, analysis, storage, and management; advanced engineering and manufacturing technology; robotics; quantum information science; advanced surveillance, positioning, and sensing technology; neurocomputing and brain interface technology; advanced energy and energy storage technology; advanced information, communication, and networking technology; cybersecurity; space technology; marine technology; transport technology; hypersonics; chemical, biological, radiation, and nuclear technology; and advanced materials science.
50 Hiroshi Asahina, “Japan Seeks to Release Rare Earths, 10 Other Critical Items from China’s Grip,” Nikkei, December 21, 2022.
51 Nurturing strategic sectors, such as defense and semiconductors, represents a clear shift from the previous focus on protecting vulnerable firms and safeguarding jobs. This earlier emphasis was often characteristic of the weakened developmental state following the Asian Financial Crisis. See David Hundt and Jitendra Uttam, Varieties of Capitalism in Asia: Beyond the Developmental State (London: Palgrave Macmillan, 2017), 76.
52 Yuki Furukawa and Takashi Mochizuki, “Government-Funded Chip Venture Aims to Restore Japan’s Glory Days,” Japan Times, May 10, 2023.
53 Yoko Kubota and Taiga Uranaka, “Elpida Seeks Bankruptcy Protection, $5.6 Billion Debt,” Reuters, February 27, 2012.
54 Yoshiaki Nohara and Yuki Furukawa, “Chip Minister Hints Japan to Fund One-Third of Second TSMC Plant,” Japan Times, August 3, 2023.
55 Ryohtaroh Satoh and Cheng Ting-Fang, “Japan’s Chip Reboot: TSMC, Samsung, Micron Pave Aay for Silicon Revival,” Nikkei, February 26, 2024.
56 Keoni Everington, “TSMC Sends Deputy Director to ‘Rescue’ Delayed Arizona Fab,” Taiwan News, July 6, 2023.
57 Intel, “Manufacturing 101. How a Semiconductor Factory Works.”
58 While TSMC has already received $8 billion from the Japanese government, Washington is imposing conditions that the Taiwanese company finds difficult to accept. See Yang Jie, “TSMC Seeks Up to $15 Billion From U.S. for Chip Plants but Objects to Conditions,” Wall Street Journal, April 19, 2023.
59 “Japan,” Independent Statistic Analysis, July 7, 2023.
60 Isabel Reynolds and Takashi Umekawa, “Japanese Panel Approves Return to Nuclear Power as Disaster Memories Fade,” Japan Times, December 22, 2022.
61 Christina Lu, “Japan’s Nuclear About-Face,” Foreign Policy, August 25, 2022.
62 “Fusion Energy Innovation Strategy,” Integrated Innovation Strategy Promotion Council, April 14, 2023.
63 “Tokyo and Seoul Mulling First Security Talks in Five Years in April,” Japan Times, March 27, 2023.
64 Christina Lu, “Japan’s Nuclear About-Face,” Foreign Policy, August 25, 2022.
65 Minister for Foreign Affairs Taro Aso, “Asian Strategy As I See It: Japan as the ‘Thought Leader’ of Asia” (speech, Foreign Correspondents’ Club of Japan, December 7, 2005).
