TOKYO — Other than trolling China, it’s still a mystery why Japanese Prime Minister Fumio Kishida chose Sanae Takaichi to run the fledgling Ministry of Economic Security.
There again, what this one-year-old agency does, exactly, is its own riddle. On the face of it, it should be grabbing global headlines: It has the authority to (deep breath) strengthen supply chains, secure critical infrastructure, oversee counter-economic espionage and sharpen the nation’s technological advantages.
In reality, its rather vague authority does not match its mission – and its leadership has so far been entrusted to lawmakers who are out of their depth.
Kishida’s first choice for the job, Takayuki Kobayashi, ended up being a political security risk himself. In August, he was sacked over ties to the shadowy Unification Church, whose close association with Japan’s ruling party emerged after the July assassination of former prime minister Shinzo Abe.
That prompted Kishida to name Nara lawmaker Takaichi as economic security minister No. 2. Takaichi, 61, is a foreign policy hawk whose vocal affection for the late British prime minister Margaret Thatcher earned her the moniker “The Iron Lady” in some corners of Japanese media.
That may be off-whack: ex-US president Donald Trump often seems more her cup of sake. In 2021, Takaichi openly campaigned to become Japan’s first female prime minister, running very largely on an anti-China platform.
A win would have been a massive boost for women in male-centric Japan, but Takaichi failed to appeal to a critical mass of female voters because – like Thatcher – she is hardly a champion of feminism. For example, she opposed legislation to let married women retain their maiden names, arguing it would damage “family values.”
Trump-style, she suggested television broadcasting licenses should be revoked for criticizing government policies. And like Trump, she is no stranger to controversy: In 2014, a photo of her smiling alongside the head of a Holocaust-denying neo-Nazi political party raised uncomfortable questions for the ruling Liberal Democratic Party (LDP).
In short: Takaichi makes most of Japan’s male hardliners look like a ball of kittens.
It may be telling that Kishida put Takaichi in charge of a ministry designed to restore Japan’s relevance in the age of China – for the whole enterprise lacks seriousness. Given the huge challenges it was supposedly assigned to address, it is doubtful the economic security minister has the budget, the prestige or the teeth to significantly alter Japan’s trajectory.
One also wonders whether Kishida’s choice of Takaichi to head the ministry makes it a dumping ground for hard-right China bashers – keeping them engaged yet out of trouble. It’s not as if Takaichi’s public profile has been buttressed by this appointment, so Kishida might be happy to have her ensconced in a ministry with less clout than meets the eye.
There’s an alternative track on which this economic security portfolio could catch Beijing’s attention for all the right reasons. Not rhetorical barbs or trolling, but a real effort to resurrect the economic reforms that Takaichi’s mentors — the now deceased Abe and former prime minister Junichiro Koizumi — envisioned over these last 20 years.
Though the foreign media loves to tout Abenomics, Koizumi’s 2001-2006 tenure was far more consequential from a structural change standpoint. It was the Koizumi government that privatized the sprawling Japan Post system. It ran the world’s biggest saving bank, with funds that politicians tapped back in the day to finance white elephant projects.
It was on Koizumi’s watch that regulators prodded banks to dispose of the bad loans from the 1980s and 1990s. He spotlighted the “concrete economy” model’s wasteful public works spending that sent government debt soaring. He tiptoed up to the issue of Japan’s chronic gender disparities.
In 2006, Koizumi handed the torch to Abe, who quickly doused the flames of economic change. Abe pivoted to trying — and failing — to rewrite Japan’s pacifist constitution. Abe’s one-year term, ending in 2007, is mostly remembered for a parade of scandals.
Five years later, in 2012, Abe made an unlikely return to the premiership. He did it with a bold package of upgrades to liberalize labor markets, eliminate bureaucracy, spur innovation and make women “shine” by reducing gender pay gaps and increasing their numbers in senior management and politics.
But Abe had very largely failed by the time he resigned in September 2020. His successor, the hapless Yoshide Suga, lasted just one year. Enter Kishida in October 2021, who has since tried to find his political sea legs amid sinking approval ratings.
Kishida began with a seemingly fresh take on the reform regimen Abe failed to implement. His “new capitalism” that aimed to increase middle-class incomes won early praise. So did Japan’s strong support for Ukraine under Russian assault.
But reform wins have been few and far between. Then Abe’s death at the hands of a crazed gunman irked by Abe’s alleged Unification Church ties changed everything. Questions swirled about the financial support the LDP had received for many years from the church.
The public, meantime, was firmly against the expensive state funeral Kishida’s party insisted on holding for Abe.
Now, as Kishida guns for a political reboot, it’s a wonder that h would view Takaichi as part of the solution. If nothing else, it seems an admission that Tokyo’s economic security ministry is more of a symbolic gesture than an agent of change.
Big remit, minimal heft
The LDP argues in policy papers, “looking back over history, many conflicts between nations in the past revolved around energy and other resources. In those days, the risk of depending on other countries for resources fundamental to a nation’s survival was so evident that any reference to ‘economic security’ was unnecessary as such.”
Fair enough. And the ministry over which Takaichi has since taken charge is unique. Economist Akira Igata at Tama University in Tokyo observes that this appears to be the “very first economic security role” of this kind “created anywhere in the world.”
Given the fall of free trade and the rising threats of global decoupling and trade polarization, a ministry of this kind is worth considering for economies from the most to the least developed.
Stabilizing supply chains, protecting intellectual property, ensuring manufacturers have ready access to raw materials, reducing vulnerabilities in power grids, pipelines, undersea cables and other vital infrastructure, making world-class semiconductors and rare earth magnets – are all mission critical.
The question is what exactly the ministry does to address these issues. Its first head, Kobayashi, was asked that early and often. His “duh” answers – “To deal with the economy and security as one” – only led to more questions.
Kishida has avoided calling the ministry a China-equalizing tool. Takaichi is a bit clearer on that. “We don’t have a specific nation to watch in mind,” she has said. “However, we must keep a close eye on countries that could impact our economic security, including China.”
There’s plenty, in theory, for her to do. In March, for example, the Japan-based factories of Toyota Motor suspended operations after a key parts supplier halted its computer systems amid a cyberattack.
Along with the threats, there are big opportunities. Japan last year successfully lobbied Taiwan Semiconductor Manufacturing Co (TSMC), one of the globe’s biggest chipmakers, to build a manufacturing plant in Japan. Global supply chain snafus also have Japanese CEOs mulling a return to more onshore production.
“We’re beginning to see firms relocate their production bases back to Japan,” Takaichi said. “It’s a welcome development from an economic security perspective, but we’ll also have to make sure there’s sufficient domestic support.”
The challenge is bigger than that. Beijing is investing trillions in owning the future of aerospace, semiconductors, software, biotechnology, renewable energy, electric vehicles and artificial intelligence, so there is plenty at stake.
But it’s highly unlikely a new bureaucracy that is still finding its feet will get Japan back in the game. In fact, the new fiefdoms being created in Takaichi’s realm might actually slow down the process.
Battle of the bureaucrats
There are already dueling fiefdoms within the Ministry of Finance and the Ministry of Economy, Trade and Industry brawling over which entity gets Kishida’s attention and more resources from parliament.
Not to be undone, the tangle of other bureaucracies overseeing everything from energy to transport to autos to agriculture to defense all want to be heard and their priorities factored into any and all decisions.
All this talking about talking within, between and around battling bureaucracies was a problem long before the LDP deemed it wise to throw into the mix a new one with ambiguous goals wrapped in the urgency of national security.
Since the Koizumi days, it’s been painfully clear that Japan’s M C Escher-like governmental dynamics need smaller ministries, fewer bureaucratic speed bumps, fewer layers of middle management, fewer meetings, and less reliance on paper documents.
Amid this tangle, handing Japan’s newest ministry to a controversial, uber-conservative lawmaker with no particular expertise in economics, trade or financial strategy – and even less so in diplomacy – may explain why China isn’t exactly quivering in its boots.
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