COVER STORY • 1

Japan’s Diplomatic & Security Strategy & External
Economic Policy in Light of the Situation in Ukraine &the Confrontation Between the United States & China

By the Study Group on a Roadmap of US-Japan-China Relations

I. Current State of Affairs(1) Diplomacy and Security① The Current State of Affairs Regarding Ukrainei) Russia’s Strategy

Nine months have passed since President Vladimir Putin launched
Russia’s invasion of Ukraine on Feb. 24, 2022. Russia appears to be
making a fait accompli of its absorption of at least the four states ineastern and southern Ukraine while the US and European nations
hesitate to intervene in the face of the threat of nuclear warfare. In
the background of this invasion is a negative outlook on the part ofRussia. During the Cold War, parity in conventional forces existed
between the US and the Soviet Union, and mutual deterrence wassecured by mutually assured destruction (MAD). But the parity inconventional forces collapsed in the post-Cold War era. So Russia is
attempting to prevent military intervention by NATO by brandishing
low-yield nuclear weapons, what we call a strategy of “escalating tode-escalate”.

agency, is full of reports that NATO, and the US in particular, iscausing the “Ukrainian crisis” means that China shares Russia’s viewthat it is the US that is violating the international order andthreatening its security. China must regard “NATO’s eastward
expansion” in the same light as the Indo-Pacific strategy of the US,
through which the latter seeks to deter China’s reunification with
Taiwan.
② The Current State of Affairs Regarding Taiwan: How

Ukraine and Taiwan Differi) China’s Interest in Taiwan

China’s interest has always revolved around the Taiwan Strait. In a
telephone conference between the US and Chinese heads of state on
March 18, three weeks after Russia’s invasion of Ukraine began,President Joe Biden sought to restrain China’s support for Russia
while President Xi Jinping did likewise for US support for Taiwan’s
self-defense.
ii) How Ukraine and Taiwan Differii) Response from the US and Europe

The US and some European nations are supplying Ukraine withweapons, imposing sanctions on Russia, and otherwise taking
measures to prevent the emergence of an international order where
Putin’s attempt to “change the status quo, not on the basis of rules
but through military power” is rewarded. This has enabled Ukraine tostep up its counterattacks on occupied territory and retake some ofit. However, NATO is taking great care to prevent the fighting fromspilling over Ukraine’s borders even as it promises to maintain its
support. This is in line with the coolness with which it is handling
Ukraine’s bid to join NATO. Behind this caution must be the fear of
circumstances that could trigger collective defense under Article 5 ofits founding treaty and create the risk of a war with Russia overUkraine escalating to nuclear warfare. Furthermore, if the invasion of
Ukraine results in an outcome to Russia’s satisfaction, it is notdifficult to imagine Russia making further expansionist moves inother parts of Europe. It appears that NATO is eager to extinguish
any such possibility by continuing to support Ukraine.
iii) China’s Response

China wants to maintain an appropriate distance from Russia. It
supports Russia while carefully avoiding military support and othermeasures to avoid economic sanctions from the US and Europe. At
the same time, the fact that Xinhua News Agency, China’s state news
https://www.jef.or.jp/journal/

Russia claims unity with Ukraine, China likewise with Taiwan. Bothcountries are major powers with nuclear weapons. But there is adistinction here, rooted in the different statuses that Ukraine andTaiwan have under international law. Ukraine is a sovereign state,while Taiwan, according to Chinese claims, is a Chinese province; inthat sense, the Taiwan question is a domestic issue. However, amilitary invasion of Taiwan would unilaterally destroy longstanding,stable governance under a government democratically elected by its
residents. It violates the rule of law, which, in the words of thePreamble to the United Nations Charter, “reaffirm(s) faith infundamental human rights, in the dignity and worth of the humanperson.”③ China’s Domestic Politics as Backdrop

The political dynamics in China today are reminiscent of the Mao
Zedong years. As supreme ruler and anxious to maintain his power,
wary of his ascendant deputy, Mao pushed him by mobilizing
Chinese youths as Red Guards and launching the Cultural
Revolution. And focusing on his personal legacy, he spoke ofachieving a world revolution and launched attacks against the Soviet
Union at their national border, and stunned the world by deciding todramatically improve relations with the US. Xi likewise is likely torepeatedly undertake irregular actions at home and abroad due tosimilar domestic political concerns. He is also prone to punishing his
Japan SPOTLIGHT • March / April 20233

opponents at home and abroad with military and economic means
while emphasizing his own moral superiority.

(2) Foreign Economic Relations

promotes the domestic production of core technologies with theobjective of “strengthening the capability of autonomous,controllable supply chains”, keeping key elements of supply chainsat home.

i) The Massive Expansion of the Chinese Economy③ The Significance of the Chinese Market for Japan

Since it adopted its reform and opening-up policy, China hasachieved economic growth by leveraging the expansion of trade andinbound direct investment. This trend has only accelerated since its
accession to the WTO in 2001. China has indeed been on the rise ineconomic terms by making full use of the international free tradesystem. China’s GDP surpassed Japan’s in 2010; by 2020, it had
grown to three times the size of the other. Moreover, China’s external
economic relations are much more complex and deeper than thoseof Russia. Given the current dependence of many major powers on
their economic relationships with China, those nations must be
prepared to accept serious harm if they impose on China the kind of
sanctions they have imposed on Russia if China decides to reunify
Taiwan by force.

i) Many Japanese Businesses Considering Expansion of Activities in
China① The Current State of the Economy and Tradeii) The Economic Relationship Between Japan and China

Let’s look at the economic relationship. China’s reliance on its
trade with Japan has been declining while Japan’s reliance on China
has increased significantly. Japanese businesses now have morethan 30,000 business establishments in China. More important
import items are being sourced mainly from China. China’s autumn
2021 electricity shortages and the 2022 Shanghai lockdown caused
shortages of a wide variety of materials and products, highlighting
the fact that it was not only high-tech items for which the supply
chains in the two nations are closely intertwined. But there are
numerous items for which China relies on imports from Japan forthe bulk of its needs. The economic, technological, and supply-chaininterdependence between the two nations is still strong.
② Confrontation Between the US and China and the Conflictover Technologyi) US Concerns about China

Meanwhile, there is confrontation between the US and China thathas been growing since the latter half of the 2010s. The US inparticular has come to see China’s technological progress andefficient and asymmetrical military buildup under its state-led
economic model and civil-military integration strategy as a threat.

China established its position as the “factory of the world” in the
2000s. As the Chinese economy expands, it has also become an
important market for Japanese businesses operating there. Roughly
half of the Japanese businesses with establishments in China
responding to a questionnaire survey have consistently stated thatthey are considering expanding business operations there and very
few respond that they are considering withdrawal or contraction.
ii) Matters of Concern for Japanese Businesses in the Chinese Market

According to a survey conducted by the Japanese Chamber
Commerce and Industry in China, whose members are Japanesebusinesses with establishments in China, its members expressed
concern over such matters as the prioritization of domestic goods
and services in government procurement as well as the stillprevalent opacity of the provisions in cybersecurity-related
legislation that are now being established, among other things. There
are also growing calls for improving Japan-China relations in theinterest of stabilizing and expanding economic transactions.

II. Policy Recommendations(1) Diplomatic and Security Policy① Information and Scenario Analysis for a Potential Taiwan

Crisis

It is important to analyze information regarding the potential “clear
and present danger” of a Taiwan emergency to consider the lessons
China is likely to be taking from the Ukrainian and the diplomatic andmilitary strategies it will adopt therefrom and to explore crisis
scenarios.
(The bar has been raised for a Chinese invasion of Taiwan, which
was already more difficult than Russia’s invasion of Ukraine.
However, the Xi administration is obsessed with reunification with
Taiwan, so a crisis could occur sooner rather than later.)ii) China’s Policy to Enhance Competitivityi) Factors to Be Considered in a Crisis
A) The Bar Is Higher for a Military Invasion in Taiwan than in Ukraine

Meanwhile, China has adopted “dual circulation” as a government
strategy in recent years. Under this strategy, China will expand
domestic demand and “create a gravitational field” that attracts
investment and technology from overseas with its attractive market
under “domestic-international dual circulation with the emphasis on
the great domestic circulation”. This is also connected to a policythat “requires strengthening the reliance of global supply chains on
China and creating powerful counterattack and retaliation capabilities
against states that stop supplies (to China as economic sanctions)”.
China also upholds “self-reliance in science and technology” andFrom a conventional national security perspective, Ukraine andTaiwan have different implications for the defense of the US
homeland. And while Russia has a land border with Ukraine, China isseparated from Taiwan by the Taiwan Strait. Landing on Taiwan
while securing air and naval supremacy over the strait will be a far
more difficult task than invading Ukraine. China observes andanalyzes the interaction between the US and Russia very closely. We
assume that the bar for a military invasion of Taiwan has gone up.
Many experts believe that a Taiwan Strait crisis will occur while Xi is
in office (Xi’s third term as president ends in 2027; a fourth term

4 Japan SPOTLIGHT • March / April 2023

would end in 2032).
B) Xi’s Obsession over Reunification with Taiwan

A higher bar does not mean that China will give up reunification
with Taiwan. As the 20th National Congress of the Chinese
Communist Party has come and gone, concern is rising in the US,
Japan, and elsewhere over China’s Taiwan policy. Xi becoming moreof a dictator means that it will be more difficult for accurate
information to get through to him, making appropriate decisionmaking that much more difficult. If economic progress does notmatch expectations, he may obsess even more over reunification
with Taiwan. The promotion of He Weidong, a PLA general who had
been commander of the theater that would be crucial to the exerciseof military force over Taiwan, to the Politburo speaks eloquently tothis point.
C) The Significance of the 2022 Communist Party Congress

It is better to prepare early for a crisis under the presumption that
it is likely to happen sooner rather than later. In his report to the 20th
National Congress of the Chinese Communist Party in October 2022,
Xi called the reunification of Taiwan a historic mission and declared:“Complete reunification of our country must be realized, and it can,without doubt, be realized!” This means that neither the Chinese
Communist Party nor Xi will be able to continue without achieving
reunification. On the other side, the US will lose its presence as wellas its rights and interests in the Indo-Pacific region if it suffers defeat
in a military conflict over the reunification of Taiwan. We must
assume that this undertaking determining the fate of great powers
will take place and be aware that Japan must be prepared to takeaction that will put its own existence on the line.

international community will see what is actually going on, and theexcuses and lies of the invader will not be accepted.
(d) Fourth is the possibility that heavy sanctions may be imposed.
If the war stretches out, this will give time for the international
community to unite. As the war drags on, massive losses will be
incurred in terms of weapons, ammunition, and other logistics aswell as casualties, making it difficult to maintain public support.
Rising criticism at home will take a heavy toll on the ability to
conduct the war. This means that the operation must be concluded
swiftly, and this means that great care must go into preparations forthe operation: air and naval supremacy must be secured beforehand,and sea-lane blockades around the Taiwan Strait must also be taken
into account. These preparations are also likely to be detected by theother side.
ii) Scenario for the Military OperationA) Quick Occupation of Taiwan

Taking these four lessons into account, China is likely to accelerate
the buildup of its ability to rapidly occupy Taiwan by means of kinetic
attack in addition to reinforcing its hybrid warfare capabilities. To thisend, it may undertake diversionary action around the Senkaku
Islands or Japan’s Northern Territories while seeking help from
Russia and/or North Korea to create a power vacuum throughintimidation and pressure. Taking these factors into consideration,
the likelihood of unforeseen confrontation and/or accidents occurringin the area surrounding the Taiwan Strait is rising. This is because
conflict between the US and China is becoming the norm. Related tothis point is that an attack on the Senkaku Islands is likely to takeplace simultaneously with the annexation of Taiwan, although thepossibility that it could be conducted on its own cannot be discarded
altogether.

D) The Lessons China Has Drawn from Russia’s War in Ukraine

It is our conjecture that China has drawn the following lessons
from Russia’s war in Ukraine. They must be carefully examined todetermine how they affect the Taiwan Strait crisis scenario.
(a) First is the effectiveness of threatening and intimidating with
nuclear weapons. The war in Ukraine revealed that the US andEurope cannot deter the use of force by a nuclear power.
(b) Second is the unforeseeable nature of the effect of hybrid
warfare. It is difficult to predict the effect of cyberattacks, destructionof network infrastructure and lifelines, traffic lane blockages, andother operations that do not amount to actual use of force.
Nevertheless, the possibility cannot be ruled out that China will use
these untested means in the preparation stage of its operation. It is
possible that China will engage in cyberattacks, disinformation,
obstruction using social media platforms, communication
intelligence, intimidation, kidnapping of key officials, sabotage,
information warfare, illegal infiltration, and other activities that will bedifficult to define as use of force under international law preceding or
simultaneously with the actual invasion. Japan and the US must
collaborate closely in their vigilance, surveillance, and other activities
regarding operations using drones and outer space/cyber systems.
(c) Third is the difficulty of conducting cognitive warfare targeting
public opinion. Particularly if hybrid warfare is ineffective, theB) Exercising Full Command over “Jurisdictional Seas”

China, in parallel with its rapid military expansion, is constructing
a domestic administrative system to exercise full command over its“jurisdictional seas” by 2035. To support this, it is building new
infrastructure that connects outer space, airspace, the sea, the sea
bottom, and land.
C) Enhancing the Ability to Transport Massive Ground Forces

One area in which China has been concentrating its efforts of lateis the enhancement of its ability to cross the sea with massive
ground forces. In recent years, it has frequently been conducting
landing exercises using civilian ships. It is likely that the PLA will use
civilian roll-on/roll-off (RORO) ships in addition to navy ships in alanding operation in Taiwan.
D) High Likelihood of Sea-Lane Blockades

However, it will be difficult for unarmed civilian ships to transportlanding forces. The first troops must rely on the navy’s own
transportation capabilities. China currently has eight Type-071 docklanding ships and is in the process of securing three Type-075
amphibious assault ships. It also has a massive number of tanklanding ships. Even all this will not be enough, though, for a
Japan SPOTLIGHT • March / April 2023

5

successful landing operation in Taiwan. Given that maritime
transport will be more important for third-party support than in the
war in Ukraine, it is likely that China will implement a sea-lane
blockade.
E) Using Drones

To minimize its own casualties during the landing operation, China
may secure air and naval supremacy before it and/or use massive
numbers of drones after an aerial blitz with missiles and otherweapons to attack Taiwanese troops as well as those of the US
Forces, Japan (USFJ). The PLA is pursuing “intelligentized warfare”,
which uses lethal autonomous weapon systems (LAWS) integrated
with artificial intelligence and is expected to be waged as “manversus-machine” or “machine-versus-machine”. China will allow
swarms of drones that do not require human intervention to makethe decisions to attack enemy troops, human and drones alike.
F) Using Outer Space and Cyberspace

Contemporary warfare weaponizes all spaces – outer space andother physical spaces, cyberspace, and cognitive space – as well as
all means available including the economy, technology, andresources. All actions that China takes to nullify US deterrence must
be taken into consideration.
iii) The US Response: Redeploying Forces to the Indo-PacificMeanwhile, the US is putting a brake on China’s expansionary
moves, emphasizing military operations across all domains andpartnerships under a newly adopted “integrated deterrence” strategy.
The US clearly no longer has the power to conduct simultaneous
operations in Europe and Asia. But since the 2014 annexation of
Crimea by Russia, European nations have been increasing theirdefense expenditures and begun to prepare for threats from Russia.
Even as it strengthens its relations with NATO, the European Union(EU) is promoting strategic autonomy on security and putting
serious effort into enhancing the overall defense of Europe. This
could be seen as an attempt to shed the longstanding defense
posture of relying on the US and effectively supplement the US
military presence there. Meanwhile, as Biden repeatedly refers to thedefense of Taiwan, the conditions are being prepared to reduce theunipolar US military presence in Europe and redistribute its military
power to the Indo-Pacific.
② Deterring the Use of Force by China in Case of an

Emergency Through Close Collaboration Between the US,
Japan, and Taiwani) Collaboration with Friendly Nations Including the US and Taiwan

Japan should take the most effective measures possible fordeterrence and response to prevent China from attempting to reunitewith Taiwan by force while thoroughly upgrading its own defense
capabilities. To this end, the US, Japan, and Taiwan should build thedetermination and capability to secure peace and stability in the
Taiwan Strait by holding full and close policy consultations with eachother, securing sufficient cooperation from European countries,
India, and other friendly states, and cooperating and providing
6 Japan SPOTLIGHT • March / April 2023

mutual support for all contingencies. Most important is the need tomake an appeal to the international community that China is moving
forward with the same kind of unlawful actions that Russia has taken
in its war in Ukraine and seeking to destroy the international order
and, most importantly, demonstrate the powerful unity andcooperation between the all-important US, Japan, and Taiwan.
ii) Maximum Support for the US

Japan must provide the maximum assistance and cooperation
allowed under current law to the US, which plays the leading role
here. Assistance to the US, particularly for outer space, cyberspace,and intelligence activities as well as logistics, is important in order toenhance Japan’s own capability for deterrence and counterattack.
The building up of the necessary overseas intelligence organizations
and cybersecurity capabilities and, where necessary, a review of thelegislation for peace and security and the Guidelines for Japan-US
Defense Cooperation should be conducted as swiftly as possible.
Although there are limits to what it will be able to do for the defenseof Taiwan, Japan should develop a clear grasp of Taiwan’s desires
beforehand through consultations with the US and Taiwan.
③ Securing the Safety of Japanese Nationals in the Far East

The possibility cannot be denied that a Taiwan emergency will
become a Japanese emergency. In that case, it will be the key
responsibility of the state to secure the safety of the Japanese people
as well as the safety of the state. The Japanese government must
proactively evacuate and bring home overseas Japanese (in Taiwan,
China, the Korean Peninsula, and elsewhere in the Far East), and to
make sure it can take all necessary measures in the event that this is
not possible by closely communicating with the relevant states.
④ Cooperation with Allies and Friendly Nations in

Peacetimei) Strengthening the Defense System in the Indo-Pacific Region

The US is countering China’s steady buildup of its military powerby strengthening the Japan-US alliance and launching the Quad (thequadrilateral security dialogue between Japan, the US, Australia, andIndia) and AUKUS (the trilateral security pact between Australia, theUnited Kingdom, and the US). Japan and other US allies and partners
not only should support the US but also unite to integrate defense
capabilities with states other than the US and enhance the defense
potential of the Indo-Pacific region in its entirety. Biden is leaning
into the defense of Taiwan, but the fact that public opinion in the US
is reluctant on this point should also be taken into consideration.
ii) Deepening the Integration of Defense Capabilities
A) The Japan-US Relationship

Cooperation with allies and friendly countries in the region should
be further reinforced with the Japan-US alliance as the core. A key
point here is deepening “integration”. Japan, through its“multidimensional integrated defense force”, and the US, under its“integrated deterrence” strategy, are working to build up theirindividual cross-domain capabilities, a seamless defense posturefrom peacetime to emergencies, and a multidimensional,multilayered security cooperation framework with allies and friendly
countries. The two nations are working beyond the military
dimension to build up the overall deterrence framework andcompetitivity by combining economic tools, building up theirtechnological and industrial foundations, and other non-militarymeans. By bringing together the power of Japan and the US in all
aspects both military and nonmilitary and further integrating theircapabilities and resources, it will be possible to maintain deterrence
and competitivity vis-à-vis China.

future policy change and lay the diplomatic groundwork towards the
improvement of the Japan-China relationship. It goes without sayingthat a China with a prosperous economy and a cooperative external
posture is to Japan’s benefit. But Japan cannot expect such a China
for the time being. In the meantime, Japan should set forth a clear
vision of how the international order should ideally be anddemonstrate its desire for coexistence and co-prosperity with China
while maintaining an appropriate distance in practice and being fully
prepared against the uncertainties in China’s future.

B) Relations with Nations Other than the USi) Efforts to Improve Japan-China Relations Through Tourism andStudent Exchanges

Japan should also seek to integrate its capabilities with nations
other than the US. The Quad and AUKUS in particular are
frameworks that have the potential to be “gamechangers” in thelong-term competition with China. The Quad enables cooperationthat employs the strengths of the four nations in emerging
technologies, infrastructure and connectivity support, maritime
security, and other areas through information sharing, policy
coordination, and mutual complementarity and offers an alternative
to “Chinese standards”. AUKUS focuses on the integration of thetechnology and industrial foundations of the three parties and comeswith the expectation that it will promote faster and more efficientresearch and development and innovation. If Japan, with its hightechnological capabilities and financial power, could participate in thelatter even in limited form, it will be possible to compete with China
more advantageously.
C) Challenges for Japan in Integrating Defense Capabilities

However, Japan faces many challenges when it comes tointegrating its capabilities with other nations in the free world. The
unique provisions of the Japanese Constitution and an inadequate
security clearance framework are clear obstacles in cooperating withother nations on military and cybersecurity matters. The
deterioration of the industrial foundations and international
competitivity including defense due to the slowness when it comesto digitalization, innovation, and dual-use technology as well as
insufficient research and development funds is reducing Japan’s
attractiveness as an international partner. Japan must tackle theseissues if it is to deepen collaboration in the Quad and with AUKUS
and help maintain and strengthen the unity of the free world.
D) Buying Time Until the Transition to a Post-Xi Regime

Lying ahead for China are the growing seriousness of structuralproblems such as slower economic growth, a declining birthrate, andan aging population as well as the political instability when it
transitions to a post-Xi regime. In the meantime, Japan and its allies
and likeminded countries should adopt the mindset of buying timeby persisting in maintaining a balancing strategy until China nolonger has the leeway to hold up an aggressive external posture.
⑤ The Importance of a Multilayered China Strategy

While the risk of the status quo being changed by force remains
high, Japan has no choice but to adopt a “hard balance” strategy visà-vis China. But Japan also needs to be mindful of the possibility of aFirst, it is important to always treat China as our everlastingneighbor and develop personal connections, maintain the dialogue,
and not give up on persuasion even if these efforts do not yield
immediate returns. It is also important to resume and expand theacceptance of Chinese tourists and students with a view to future
improvement of the relationship.
ii) Tackle International Challenges that Can Be Addressed Together
with China

It is also important to be prepared to work together with China on
international issues whose resolution will be facilitated by suchcooperation. Allies and likeminded countries should not abandon
efforts to engage China in areas where cooperation is possible. It isnecessary to take the greatest care so that diplomacy with China will
not focus solely on confrontation. It will be important for diplomacy
with China going forward to adopt a multilayered strategy oriented
towards the future even if benefits may not be available in the nearterm.
iii) Achieve Dialogue and Cooperation with Taiwan

Active diplomacy vis-à-vis China should be accompanied by close
communication with Taiwan. In dealing with China, Taiwan is avaluable partner with which Japan should exchange information andotherwise cooperate to their mutual benefit. Dialogue andcooperation between Japan and Taiwan should be explored throughboth official and unofficial contacts.

(2) External Economic Policy
The following measures should be taken so that Japan maintains
an appropriate presence within the international community, thepremise being that measures are taken to continuously maintain alevel of population and strengthen the technological competitivity ofdomestic industries as their basis.
① Maintain and Strengthen Japan’s Strategic

Indispensability and Autonomy from the Perspective of
Economic Securityi) Maintaining Technological Superiority• Use the Economic Security Promotion Act and other means topromote the research and development of core, cutting-edge
technologies that have the potential to be used in a wide variety ofareas including government infrastructure, counterterrorism/
Japan SPOTLIGHT • March / April 2023

7

counter-cyberattack measures, and national security.
• Prevent the leakage of core technologies through the movement ofpeople and corporate acquisitions.
• With regard to products and technologies in which Japan has an
overwhelming technological superiority, aim beyond decoupling
and continue efforts to enable Japanese products and technologies
to continue to be indispensable to the countries concerned bymaintaining technological superiority and supply stability whileadministering effective technology leakage prevention measures(promotion of strategic indispensability).
ii) Enhancing the Supply Reliability of Japanese Technology andSecuring Chokepoint Products

Consider the adoption of measures to retaliate against thesuspension of rare earth and other critical mineral supplies to Japanby suspending the supply of products essential to the offending
country.
② Enhancing the Resilience of Supply Chainsi) Voluntary Diversification of Corporate Production Bases

For products that would have a serious impact on Japanesesociety if their supply were to be suspended, businesses should be
encouraged to identify the chokepoints in their supply chains and do
the preparatory work for grasping the state of their supply chains
and their reconstruction when rapid change occurs, while voluntarily
diversifying their production bases and utilizing digital technology.
ii) Developing Counterweights to the Chinese Market

To reduce national security concerns regarding over-reliance on
China, efforts to reduce the relative importance of the Chinese
market by looking for a post-China market where profits can bemade, and diversifying overseas investment and investing in markets
that will be the next to take off should be encouraged. The
government should consider measures to support this, such as theencouragement of Japanese corporate investment in ASEAN member
countries, India, and elsewhere through assistance supplementary to
official development assistance. The growth in the emerging
economies in Southeast Asia and elsewhere should be incorporated
through government support for digitalization and other means.
iii) Measures to Help Secure Key Commodities

The government should designate commodities whose shortage
would have a grave impact on the daily life of the people and theeconomy as important supplies under the Economic Security
Promotion Act and undertake measures to secure them.

iii) Efforts should be sustained to develop rules with transparency
and foreseeability based on a common understanding withlikeminded countries so that trade and investment and supply chainsare not unduly impacted by arbitrary, unilateral measures.
iv) To promote compliance with existing WTO rules, Japan should
work with likeminded countries to establish an alternative
mechanism to the dysfunctional WTO dispute settlement system,
and also restore the Appellate Body to functional form.
v) Multiple states and regions including China have applied foraccession to the Comprehensive and Progressive Agreement forTrans-Pacific Partnership (CPTPP). First, they must be examined
objectively in detail for their history of compliance with other trade
agreements and confirm that they are prepared to meet the CPTPP’shigh standards without exception. Consistency with international
trade rules should also be given full consideration when setting up
the economic security architecture.
④ Building Cooperation and Promoting Mutual

Understandingi) Japan is well behind the US and Europe when it comes tosummitry and Cabinet minister-level interaction with China. Needless
friction with China should be avoided and high-level mutual
understanding should be promoted by maintaining the framework for
productive exchanges.
ii) Mutual understanding should be promoted through such means
as youth exchanges and human resource exchanges, academic
exchanges, and business contacts.
iii) Cooperate on policies to deal with climate change, aging,communicable diseases, and other areas of common concern.
⑤ Enhancing Official and Private Sector Intelligencei) Work to establish an external intelligence organization modeledon those existing in the US and Europe to collect, evaluate, andanalyze information to promote the national interests.
ii) Businesses (global corporations in particular) should also
improve their ability to utilize the international state of affairs in theirbusiness activities by conducting comprehensive, unified analyses of
information that they gather through their overseas networks.
iii) In addition, collaboration between the government andbusinesses, currently limited to the collection of industrial
information by individual businesses, should be upgraded to theanalysis and evaluation of the international state of affairs andreflected in policy decisions.

③ Establishing a Rules-based Business Environment forInternational Transactions and the Domestic Marketi) Japan, with an economy whose relative weight is declining,
requires international transactions and overseas markets to function
according to rules.
ii) The Regional Comprehensive Economic Partnership (RCEP),
which came into effect in January 2022, has 15 members including
China. It is important for the agreement to be implemented in full.
8 Japan SPOTLIGHT • March / April 2023

The Japan Economic Foundation (JEF) initiated the Study Group on a
Roadmap of US-Japan-China Relations with prominent Japanese experts inJanuary 2022 and concluded its role by publishing recommendations in
February 2023.