In October, the government's National Security Secretariat (NSS) opened an ad hoc office to prepare to add an economic division to the NSS, which serves the National Security Council (NSC). The new division will handle economic issues related to foreign affairs and security, in cooperation with the United States.
In a related development, the Diet has approved a bill that revises the Foreign Exchange and Foreign Trade Act to tighten controls on foreign investment in specific Japanese companies deemed important for national security. The revision is set to come into force in April next year.
Why has the government taken those measures? There are two main reasons.
The first reason reflects a series of developments in the world. Prominent among them were Chinese President Xi Jinping's speeches to the National Congress of the Communist Party of China in 2017 and the National People's Congress in 2018. As the Communist Party "exercises overall leadership over all areas of endeavor in every part of the country," he said, China makes "all-out efforts" internally "to build a great modern socialist country" and "to build the people's forces into world-class forces." On the international scene, he declared, China seeks to promote the Belt and Road Initiative and "take an active part in reforming and developing the global governance system."
In 2015, China unveiled a national roadmap, dubbed "Made in China 2025," for enhancing manufacturing by naming 10 key sectors as industrial policy priorities, including, among others, new information technology -- the 5G next-generation communication system -- as well as artificial intelligence (AI) and new materials. At the same time, it embarked on a "military-civil fusion" strategy, envisioning global military and industrial supremacy by having its armed forces and private sector share advanced technologies.
Even if a temporary truce is agreed on in the U.S.-China trade war, the Chinese plans laid out above are likely to remain unchanged.
The United States has been playing hardball with China. In the 2017 "National Security Strategy" report, it called China a "revisionist power." In a speech on the China policy of the administration of U.S. President Donald Trump in 2018, Vice President Mike Pence severely -- and exhaustively -- criticized China's trade practices, its attempts to alter the status quo in the East China and South China seas by force, its "Made in China 2025" plan, its "military-civil fusion," its "debt-trap diplomacy" and more.
Also in the United States, the National Defense Authorization Act (NDAA) for fiscal 2019 reinforced the authority of the Committee on Foreign Investment in the United States (CFIUS), which reviews the national security implications of foreign companies' mergers with and acquisitions of U.S. companies, to evaluate foreign investment in U.S. businesses related to critical technology and critical infrastructure. This measure targets China. The NDAA also has banned U.S. federal organizations from using services and equipment provided by certain Chinese high-tech firms, including telecom giant Huawei Technologies Co.
European countries, too, have moved to restrict foreign investment in technologies vital to their national security. Germany, alarmed by a Chinese company's acquisition of a major German industrial robotics company in 2016, adopted a new measure the following year to make priority screenings mandatory for foreign investments in firms that provide design equipment used for military purposes, cyber technology and critical infrastructure. Britain and France have tightened controls on foreign investment in companies related to fields such as quantum technology and computers. In the spring of 2019, the European Union enforced a new unionwide screening rule for direct investment from outside the EU. The new regulation is aimed at evaluating whether or not non-EU investments, especially in areas of cutting-edge technologies, including robotics and AI, and energy, impair the union's security.
Rapid tech advances
The second reason for the introduction of the Japanese measures mentioned at the outset of this article is to cope with rapid technological advances and the nature of emerging technologies, such as AI, biotechnology and advanced semiconductors. The word "emerging" means that they are just "coming out" or still at the embryonic stage but are strongly expected to materialize in the not-too-distant future.
Technology will always be used by someone for something. But when an emerging technology appears, it is not always immediately clear who and what the users and purposes will be. Moreover, basic scientific knowledge can directly accelerate the development of technology, meaning advances can happen extremely fast.
For instance, in the fast-advancing fields of brain science and neuroscience, it has now become possible -- yet at a very early stage -- to use brain waves to control drones. It remains to be seen who will further develop and use this technology and for what purpose. Still, it is readily imaginable that the very brains and nerves of human beings will likely become a security domain equally as important as the existing ones -- land, sea, air, space, cyberspace and the electromagnetic spectrum.
As observed above, it is quite natural that the Japanese government is now moving to tighten security controls on security-sensitive technologies in order to prevent the proliferation of technologies that can be converted into military capabilities; to protect those critical technologies in which Japan has a global edge as a way of safeguarding domestic industry; and to strengthen vulnerable technologies. However, such government efforts are insufficient for two reasons.
First, to effectively ensure controls on security-sensitive technologies, the Japanese government needs to create a framework for monitoring which people and organizations engage in security-sensitive research and development activities as well as the categories of R&D activities and their state of progress. Only when such a system is in place will the government and industry be able to share technological information, and only then will it become possible to adequately control foreign investments in Japan.
Once such a system is established in Japan, the United States and its allies will be able to more effectively exchange information on cutting-edge technologies with Japan.
CFIUS is chaired by the U.S. treasury secretary, with participation by representatives of departments and agencies such as the State Department, the Defense Department and the Energy Department, as well as White House officials. The committee carries out reviews of foreign investments with its members sharing information. Japan needs to improve its information-sharing and investment reviewing processes in a manner similar to CFIUS.
Second, the tightening of controls on security-sensitive technologies is just a "protective" measure. What Japan also needs is a "proactive" one. Considering that basic science and cutting-edge emerging technologies are and will be the key to the security of the country and the development of its industries, we have to think about "protecting" and fostering technologies at the same time. Not only the United States and China but also European countries are already moving in that direction.
The United States allocates huge budgetary resources to research projects in the fields of advanced chips, quantum technology and AI, among others. The same holds true in Germany, too.
The key sectors designated by the "Made in China 2025" plan include new materials, numerical control machinery and robotics, high-performance medical devices, and new-energy vehicles, all of which affect the basis of Japan's international competitiveness. Japan, which seeks to remain a science- and technology-oriented nation, needs to make major investments in R&D activities in the fields of basic science and cutting-edge emerging technologies.
The way such resources are invested is equally important. As mentioned earlier, it is not always clear by whom or for what emerging technologies will be used. To put it another way, if someone invents a creative way to utilize an emerging technology, the discovery may help expedite the advancement of the technology itself.
As we now live in the 21st century, the government should update its ability to quickly respond to technological advances. To that end, we should take inspiration from Doraemon, the robot cat of the anime world, whose theme song opens with the line: "I wish I could have this sort of thing." In addition to curiosity-driven research, the government should also fund research projects with set goals and targets to promote emerging technologies.
Shiraishi is the chancellor of the Prefectural University of Kumamoto. From 2011 to 2017, he served as president of the National Graduate Institute for Policy Studies, and from 2007 to 2018 he was president of the Institute of Developing Economies, Japan External Trade Organization.
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