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51. Japan, NATO, and the Diversification of Security Partnerships

Author:
Elena Atanassova-Cornelis, Takuya Matsuda, Bart Gaens, and Nele Loorents
Publication Date:
09-2024
Content Type:
Special Report
Institution:
International Centre for Defence and Security - ICDS
Abstract:
The US-led military alliances remain an integral part of the defence and deterrence strategies of countries in the Indo-Pacific and Euro-Atlantic regions. Whereas the European security architecture is centred on a multilateral alliance, that is, NATO, the Asian security order is rooted in the hub-and-spokes system – the network of US-led bilateral alliances with key partners in Asia, such as Japan. Bringing in experts from Europe and Japan, this report examines the key shifts in the allies’ threat perceptions and strategic thinking on policy responses. It also explores the rise of informal security alignments designed to address both traditional and hybrid challenges and exemplified by the minilateral-type security cooperation pursued by Japan. Finally, the report zooms in on the growing interlinkages between security in the Indo-Pacific and Euro-Atlantic regions, as evidenced by the deepened security ties between like-minded partners. The report argues that the Russian invasion of Ukraine should be seen as a critical juncture for alliance politics. Military alliances are now increasingly being operationalised to enhance military readiness and effectively generate combat power in case of a contingency. The US-Japan alliance, the report finds, should be perceived as a manifestation of some of the broad and enduring changes in the role of alliance politics in international security, which are observable both in the Western Pacific and Europe. While the US-led alliance remains a key pillar of the security and defence policies of the ‘junior’ allies, notably Japan, the report highlights the allies’ uncertainties about the sustainability of the American security commitments, both in the Indo-Pacific and Euro-Atlantic region. Assessing Japan’s updated conceptualisation of security in the context of the Ukraine war and the rise of hybrid threats, the report detects a sense of urgency in Tokyo to develop a diverse set of capabilities and expand security partnerships. Australia, India, and the Republic of Korea remain a priority in terms of alignment cooperation. At the same time, the changing nature of security challenges is steadily raising the importance of cooperation with geographically distant partners, as seen in Tokyo’s evolving security partnership with the EU and NATO. Japan’s strategic partnership diplomacy exemplifies a broader trend of strategic diversification. Tokyo has been successful in utilising alignment policy to promote an interconnected network and accomplish issue-based, functional cooperation in various areas. From NATO’s perspective, addressing hybrid challenges requires collaboration with various actors, including geographically distant players. Minilateral and multilateral formats involving a small group of like-minded countries can provide NATO with the opportunity to work closely with Japan and other Indo-Pacific partners on specific issues, such as cyberattacks and disinformation campaigns.
Topic:
Security, NATO, European Union, Resilience, and Hybrid Threats
Political Geography:
Japan, China, Europe, South Korea, and United States of America

52. The Rise of the Free and Open Indo-Pacific and the Challenge of Deterrence

Author:
Kenneth R. Weinstein and William Chou
Publication Date:
08-2024
Content Type:
Special Report
Institution:
Hudson Institute
Abstract:
The late Japanese Prime Minister Shinzo Abe first introduced the concept of a free and open Indo-Pacific (FOIP) in July 2016. Over the past eight years, FOIP has redefined the geopolitics of Asia, becoming central to the strategic visions of Japan, the United States, Australia, India, South Korea, key European nations, and the European Union. Every nation that has adopted FOIP has developed its own version of the concept. But FOIP still repositions the strategic geography of Asia, broadening the region from the Asia-Pacific, which placed a dominant China at the center, to the Pacific and Indian Oceans. This shift highlights the critical role of the four large democracies that comprise the Quadrilateral Security Dialogue (Quad)—Japan, India, the US, and Australia—a partnership the states revived with the ascent of FOIP. FOIP, moreover, offers a conceptual counter to the strategy of China’s One Belt, One Road (also known as the Belt and Road Initiative, or BRI) by engaging Australia and Europe on the importance of economic development assistance for, and investment in, Southeast Asia. The Trump administration’s rapid adoption of FOIP—the first time an ally’s strategic concept became central to US grand strategy—deepened America and Japan’s strategic alignment, which encouraged Tokyo to become more engaged in security and encouraged the US to become more engaged in economic development. The concept has made immense contributions to Indo-Pacific connectivity, prosperity, peace, and security. It has also been central to the Biden administration’s efforts to move away from the traditional hub-and-spoke alliance in which US partners worked directly with Washington as the hub but not with not each other, toward a lattice architecture in which like-minded allies (such as Australia, Japan, South Korea and the Philippines) are linked to each other in a mutually reinforcing effort to meet the region’s security challenges. However, a Hudson Institute tabletop exercise conducted for this study showed the limitations of FOIP as a strategic doctrine. Specifically, it cannot induce either friendly or less-friendly ASEAN countries to openly aid Taiwan if the People’s Republic of China seeks either to invade or impose a blockade. FOIP, nonetheless, remains central to promoting prosperity and connectivity in the Indo-Pacific. In the aftermath of Russia’s invasion of Ukraine, Prime Minister Fumio Kishida of Japan refashioned FOIP and focused on promoting agreement around minimal international norms that Russia violated. To enhance regional trust, Kishida highlighted an “Indo-Pacific way,” which would enhance regional resilience by mitigating natural disasters through cooperation under Japanese leadership and enhancing maritime security. Herein lies the security paradox behind FOIP: The concept can extend the network of partners and allies dedicated to Indo-Pacific security. This, in turn, may reduce the burden America bears by shifting it to other nations. But for the time being, FOIP rests upon the foundation of US deterrence.
Topic:
Security, Foreign Policy, Alliance, and Deterrence
Political Geography:
Japan, India, Australia, United States of America, and Indo-Pacific

53. Tokyo Has an Opportunity to Become a Financial Hub

Author:
Mark Siegel
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Hudson Institute
Abstract:
On his September trip to the United States, Japanese Prime Minister Fumio Kishida attended the United Nations’ annual General Assembly session, and later gave a well-received speech at the Economic Club of New York. His remarks included a comment about how his administration was actively considering a series of policy steps intended to reinvigorate Tokyo’s place in the global financial system; raise Tokyo’s profile as an important financial hub for Asia; and implicitly, regain market share that had been long lost to Hong Kong, and more recently to Singapore. The prime minister’s intentions are laudable, and his suggestions are worth taking seriously. In any case, the proposals under consideration are generally good for financial markets in Tokyo. Cynics will ask whether the horse has left the barn. In a world where continuous face-to-face interaction is less and less necessary for financial transactions, it is fair to ask what it really means to be a financial hub in the twenty-first century. But Japanese officials are not wrong to be concerned about revitalizing Tokyo as an international financial center. Let’s start by acknowledging that the Japanese government—including the prime minister’s office, the Ministry of Finance (MoF), the Financial Services Agency (FSA), and other official bodies—is serious and prepared to take steps to make Tokyo an attractive place for international financial firms to situate their Asian headquarters. After years of asking market participants for recommendations, policymakers have in hand a menu of policy adjustments that make a lot of sense. The list is long, with proposals ranging from offering official business documentation in English, to having special one-stop and fast-track approval processes, to adjusting tax law. Adjustments to tax law are a major issue: for example, the creation of a temporary tax resident status, relaxation of exit tax rules for foreign nationals, and adjustment of tax rules related to the transfer of overseas assets are constructive, long-standing suggestions. Similarly, adjustments to immigration rules related to foreign domestic workers would make it easier for expats to replicate some of the lifestyle benefits that they enjoy in other areas of East Asia.1 Some of the proposals are easy-to-implement, low-cost, measures that would make life less difficult for foreign firms and expats who want to make Tokyo a regional base. And some of them (e.g., major changes to financial sector law and regulation) are harder to imagine, but possible. The three following observations can be made. First, essentially all of the world’s major financial centers of the twentieth century had common law–based legal and regulatory systems. Japan, like France, has a civil law–based system. This difference matters. Both systems function smoothly in the operational sense, but international finance has been dynamic precisely because it rests upon a legal framework that tends to be permissive with guardrails, as opposed to restrictive with an only-allowed-with-permission structure. The point here is not to litigate the virtues and failings of the world’s two most prominent legal systems. The point is that the Japanese government should be honest with itself about the legal and regulatory norms that it collectively thinks of as Japanese, in the context of attracting foreign financial firms to Tokyo. The right kind of policy shifts could be transformative. That said, from a political perspective, some of them will appear to be very challenging. Second, timing matters, and now may be the right time to take policy risks; a window of opportunity may be closing. The reabsorption of Hong Kong into the People’s Republic of China that started under Carrie Lam is now well advanced, and the city has gone from being the preeminent regional hub for Asian finance to being something much less. It continues to lose vitality. A city that had Anglo law with Chinese characteristics (and geography) is now a different place, having adopted Chinese rules with a superficial Anglo form. That transformation has been an unhappy experience for the cosmopolitan residents of the former crown colony, but it is an opportunity for competing financial centers. Singapore, to pick the obvious example, has benefited from Beijing’s heavy-handed approach to Hong Kong. With common law already in place, an existing and well-developed financial community, and not-dissimilar geographic advantages, Singapore is a natural option for regional headquarters and staff as the Hong Kong business environment deteriorates. But Singapore is physically smaller than Hong Kong, and if the latter occasionally felt like the Chinese version of the financial Wild West, the former feels more like a very buttoned-down, engineered community. So while some of what had been Hong Kong’s centrality, and commercial verve, has moved slightly west, a lot of it has been dispersed far and wide. Dubai has picked up some of the slack, and no doubt some of the business has moved back to London and New York—maybe as an interim step, or maybe for good. There is no preeminent Asian financial hub today. It is still in play, and that is a window of opportunity. Third, the metaphorical pie may be shrinking. What if—in a post-COVID world—a central fact of our new environment is that financial centers, like money itself, have been substantially dematerialized? Even the undisputed global financial centers—New York and London—have experienced some of this new reality. Bank and broker-dealer headquarters are no longer beehives of activity, creativity, and deal-making. They are more like corporate conference centers and operation hubs, only housing activities that require collective physical groups on an as-needed basis. Those activities should not be devalued, but these places are relatively empty shells compared to the Before Times (pre-2020). The large banks’ financial statements tell us that these changes have not hobbled actual financial activity, but the staff does not come to the office every day, and does not want to.
Topic:
Economics, Finance, Banking, and Regional Power
Political Geography:
Japan, Asia, and Tokyo

54. Japan’s Approach to the Global South

Author:
Tobias Harris
Publication Date:
04-2024
Content Type:
Working Paper
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
Japanese Prime Minister Fumio Kishida, in a January 2023 speech in Washington, DC, stressed that if the G7 countries and their developed-world peers neglect the “Global South”, “we will find ourselves in the minority and unable to resolve mounting policy issues.” These remarks set the stage for a major theme of Japan’s G7 presidency that year, during which Tokyo continued to highlight the importance of more “humility” to strengthen relations between the group’s members and the “Global South”. The G7 leaders’ communiqué at their May 2023 Hiroshima summit did not refer explicitly to the Global South—the United States and other nations did not necessarily share Japan’s preference for the term, which risks treating as monolithic an enormously diverse array of countries—but the document stressed the importance of addressing the needs of middle- and low-income states, including a commitment to “continued efforts to scale up official development assistance (ODA)” and to adopting “innovative financing mechanisms”. This emphasis on outreach to the developing countries assumed greater urgency following Russia’s invasion of Ukraine, when they were often reluctant to support Western efforts to isolate and punish the Kremlin for its aggression. Japan’s approach to the “Global South” is not merely rhetorical. The Kishida government inherited a long-standing approach to developing nations, particularly those in Asia, that seeks to leverage Japanese ODA and public and private investment. The approach has two goals: to promote growth and strengthen economic ties with developing countries, and to foster trust and political credibility that can be translated into influence. The strategy is shaped by Japan’s national interests but seeks to address developing countries’ economic needs without drawing them into an anti-Beijing bloc. The approach has worked well in Southeast Asia, where, thanks to decades of efforts by successive governments, Japan is viewed particularly favorably. Tokyo now appears increasingly determined to pursue the same strategy in other parts of the “Global South”, including South Asia, the Pacific island states, and, to a lesser extent, Africa and Latin America. As Japan’s G7 peers seek to undertake their own initiatives to improve relations with the “Global South”, the key principles and successes of the country’s policies are worth examining.
Topic:
Foreign Policy, Economics, Democracy, Business, Global South, and Trade
Political Geography:
Japan, Asia, and Indo-Pacific

55. Have Dynamic Spillovers and the Connectedness of Trade Policy Uncertainty Changed During the COVID-19 Pandemic and Sino–US Trade Frictions?

Author:
Chien-Chiang Lee and Farzan Yahya
Publication Date:
03-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
In this paper, we examine the spillover and connectedness between the trade policy uncertainty (TPU) of the United States (US), China, Japan, and the Republic of Korea (henceforth, Korea) under global geopolitical risk (GPR), infectious disease equity market volatility (EMVID), and GPR from North Korea (GPRNK) using a relatively novel time-varying parameter vector autoregression (TVP-VAR) approach. Additionally, method of moments quantile regression is utilised to estimate the asymmetric effect of GPR, GPRNK, and EMVID on TPU. Our findings suggest that there is a high total and directional spillover amongst underlying variables during Sino–US trade friction that further elevated during the coronavirus disease (COVID-19) pandemic period. The US is a net receiver of spillover from the TPU of all economies, while the Chinese TPU receives spillover from EMVID. The results further confirm that both the TPU of China (TPUCN) and the TPU of the US (TPUUS) are vulnerable to EMVID, but the effect is stronger for Chinese TPU in the higher quantiles. Although Japanese TPU is less vulnerable to GPR and EMVID, it is significantly exposed to GPRNK. Korean trade shows resiliency and immunity to pandemic-induced volatility and GPRNK.
Topic:
Trade Wars, Trade Policy, COVID-19, and Spillovers
Political Geography:
Japan, China, Asia, South Korea, and United States of America

56. The Effect of COVID-19 on Firms’ Behaviour: The Case of Japan

Author:
Yuting Chen and Bin Ni
Publication Date:
03-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Since the onset of the coronavirus disease (COVID‐19) pandemic, social distancing practices and government‐mandated lockdowns have become the norm. These have cut off interaction amongst people, firms, and society, triggering an even larger decline in economic activity. In this study, we apply annual Japanese foreign affiliate data to quantify how COVID-19 has affected firms’ behaviour in various aspects. The estimation results show that both the revenue and purchasing behaviour of Japanese foreign affiliates were affected during COVID-19. This negative impact is mainly through the channel of stringent regulations imposed by host countries where affiliates are located. The general result we can derive from these findings is that COVID-19 negatively affects Japanese firms engaged in overseas activities. This leaves us with the question of when external shocks such as COVID-19 stand in the way of firms’ overseas activities, and what role the government should play to achieve a balance between safety and economic revival.
Topic:
Trade, COVID-19, Performance Evaluation, and Firms
Political Geography:
Japan and Asia

57. Foreign Direct Investment, Brand Value, and Economic Performance: A Multinational Analysis

Author:
Tuba Yıldız, Ünal Arslan, Zeynep Ökten, Yıldız Sağlam Çelıköz, and Hale Kırmızıoğlu
Publication Date:
06-2024
Content Type:
Journal Article
Journal:
Istanbul Journal of Economics
Institution:
Istanbul University Faculty of Economics
Abstract:
The visibility and dependability of multinational corporations’ products increase with the fact that they introduce their goods to markets in other nations through foreign direct investments. The method for presenting products to international markets through foreign direct investments reveals the product’s reputation and therefore the brand’s development value. This study examines the relationship between foreign direct investments and brand value in Australia, Canada, China, France, India, Japan, Spain, the USA, and the UK for the period 2007-2023. The majority of studies in the literature attempt to explain the impact of brand value on foreign direct investments. However, very few studies explain the impac foreign direct investments on brand value and 1st generation unit root tests were generally used. Unlike existing studies, In this study, the second-generation unit root test, Durbin-Hausman cointegration, and Common Correlated Effects Mean Group estimation methods were used. As a result, it is anticipated that this study will contribute to the literature in this regard. The findings show that increases in foreign direct investments boost brand value.
Topic:
Economics, Foreign Direct Investment, Multinational Corporations, Data, and Branding
Political Geography:
Japan, China, United Kingdom, Canada, India, France, Spain, Australia, Global Focus, and United States of America

58. China, The United States And Japan In A Changing International Order: Historical Foundations Challenged By The Rise Of China

Author:
Cem Yılmaz
Publication Date:
06-2024
Content Type:
Journal Article
Journal:
Novus Orbis: Journal of Politics & International Relations
Institution:
Department of International Relations, Karadeniz Technical University
Abstract:
This study analyses bilateral relations among People’s Republic of China (China), the United States (US), and Japan by comparing the impacts of historical foundations on the one hand and a prominent contemporary factor, which is the rise of China. The study aims to compare basic historical data and the resilience of these data in the face of a rising China. The relationships among the three actors demonstrate that the historical legacy continues to hold prominence in Chinese perspectives of Japan, while the rise of the actor is prominent in American perspectives of China. Both historical legacy and a rising China factor are dominant in Japanese perceptions of China. The Japanese foreign policy towards China is characterised by a mutual reinforcement of both dimensions, resulting in an overall enhancement of their strength. The study, in this instance, demonstrated that historical parameters become less relevant when a contemporary parameter has the potential to have a major effect on history. The rise of China, which has resulted in a fundamental shift in the international order, and the decline in the importance of the historical dimension in the relationships between the actors under examination are viewed as two phenomena that reinforce one another.
Topic:
History, Geopolitics, and International Order
Political Geography:
Japan, China, Asia, North America, and United States of America

59. How Japan Thinks about Energy Security

Author:
Ben Cahill, Jane Nakano, and Kunro Irié
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
Energy security is a significant challenge for Japan. As an import-dependent country, Japan has sought to protect itself from fossil fuel supply disruptions and shocks by cultivating strong relationships with exporting countries and investing throughout the energy value chain. More recently, both its largest utilities and its state institutions have focused on raising investment in renewable energy, aiming to decarbonize while retaining a diversity of energy sources. The country pledges ambitious but realistic emissions reductions. Transition pathways will vary in every country, and Japan naturally takes a different view on energy matters than resource-rich countries like the United States. Japan’s climate targets and energy planning show that progress is possible without following exactly the same trajectory as Washington or Brussels.
Topic:
Climate Change, International Trade and Finance, Geopolitics, Sustainability, and Energy Security
Political Geography:
Japan and Asia

60. It is Time to Reconsider the Hereditary Succession of Politicians and Medical Practitioners in Japan: Reform Ideas to Overcome the Adverse Effects

Author:
Yukio Sakurai
Publication Date:
07-2024
Content Type:
Journal Article
Journal:
The Rest: Journal of Politics and Development
Institution:
Centre for Strategic Research and Analysis (CESRAN)
Abstract:
This article examines the current status and challenges of Japan’s hereditary succession system, focusing on the hereditary succession of politicians and medical practitioners. It argues that hereditary succession in these two professions has negative impacts on the political and social structures of Japan and proposes some reforms to address this issue. The following two conclusions were reached through the study. First, the hereditary succession of politicians is undoubtedly one of the root causes of the stagnation in politics, which discourages the young generation from engaging in politics. The time has come to rethink whether this is the right thing to do about hereditary succession from a voter perspective, which is a crucial issue in democracy. Second, the hereditary succession of medical practitioners is due to the three factors pointed out in this article. These factors contribute to the social effect of fixing part of the structure of society, which is undesirable as an obstacle to free occupational choice and equal opportunities for young people. It is, therefore, necessary to change the medical education route from a single track to a multiple track and decrease the proportion of hereditary succession so that a diverse range of people with humanity and compassion may become candidates for medical practitioners. This article suggests some possible ideas for reforms to achieve this goal. It is time to reconsider the hereditary succession of politicians and medical practitioners in Japan because the people need those who have humanity and compassion in their mission spirit to contribute to society over time.
Topic:
Politics, Equal Opportunity, and Hereditary Succession
Political Geography:
Japan and Asia