‟SELLING OFF JAPAN” ISN’T TRADING FIRMS’ BUSINESS
Two top members of the Biden administration, State Secretary Antony Blinken and Defense Secretary Llyod Austin, visited the Ukrainian capital of Kyiv to confer with President Volodymyr Zelensky on April 24, exactly two months after Russian President Vladimir Putin started his incursion of Ukraine.
Blinken declared during a news conference in southwestern Poland the following day: “We certainly saw people on the streets of Kyiv, evidence of the fact that the battle for Kyiv was won…Russia’s attempts to subjugate Ukraine and take its independence have failed.” Austin went further by announcing that America believes Ukraine can win the war against Russia with “the right equipment and the right support.” The US is expected to resume part of its embassy operations in L’viv, western Ukraine, as early as this week. It is also continuing to increase military assistance.
Meanwhile, Putin apparently hopes to unambiguously demonstrate his victory in eastern and southern Ukraine, using Russia’s May 9 Victory Day as a sort of self-imposed deadline. But the Russian incursion will not end there. On April 22, General Rustin Minnekayev, deputy commander of the Russia’s Central Military District, projected:
“Control over the Dombas region and the south of Ukraine will secure the corridor to Crimea and is another way to Transnistria.”
Transnistria is a breakaway pro-Russian state that is internationally recognized as part of Moldova. Russia aims to seize Moldova after controlling Ukraine.
President Zelensky has been relentless in his resolve to repel the Russian invaders under all circumstances. Although he has warned neighboring nations to “prepare for a possible Russian nuclear attack,” he has never said Ukraine would succumb to Russia’s nuclear weapons. He has been unwavering in committing himself and the Ukrainians to risk their lives in order to protect their homeland. All Ukrainians recognize that a nation must exist beyond the deaths of individual citizens.
What about we Japanese in light of the impressive show of Ukrainian patriotism? I believe we would do well to prepare for China taking action to shake the very foundations of Japan in the not-too-distant future. Only then will we realize that the threat of China will be far more formidable than Russia’s.
Dangerous Situation Evolving for Japan
President Xi Jinping and the Chinese Communist Party (CCP) are far craftier than Putin and those around him. Instead of launching a violent attack on Japan using a haphazard excuse, the Chinese will likely try to seduce Japan through the backdoor, as it were. We Japanese will get taken in, our potential national power sucked up by them, before being driven into a corner with no means of countering when we belatedly realize what China has done to us. This is a ploy China has historically been very good at. And now, a situation incredibly dangerous to Japan is in the offing. Professor Masahiko Hosokawa, a former bureaucrat who now teaches international business at Meisei University in Nagoya, central Japan, points out:
“Today China is making an extraordinary effort to secure all its crucial strategic industries at home. It has established funds to take over medium-sized and small foreign enterprises capable of providing the key components its industries are dying to get, making a list of possible overseas enterprises to target, many of them in Japan.”
China has achieved phenomenal economic growth by utilizing every possible means, legal or illegal, to acquire hard-to-get foreign technologies. The world’s corporations, including those in Japan, have hotly competed against each other investing in China and embarking on joint ventures with local companies. Coerced to introduce cutting-edge technologies as they advance into China, foreign corporations have been subject to the CPP’s supervision and guidance, with their advanced technology having eventually been wrested away.
A typical case in point is high-performance magnetics, which cannot be manufactured without rare metals. China has an 85% share of the total world rare metal output. In 2010, when tensions between Japan and China intensified over the territorial rights to the Senkaku Islands in the East China Sea, China abruptly stopped selling rare metals to Japan, driving Japanese companies to the wall. The Chinese side then solicited them to invest in joint ventures for production in China, guaranteeing a ready delivery of rare metals and cooperation of the Chinese government. At the time the Chinese were seeking in particular a transfer of the Japanese technology for high-performance magnets.
Japan then boasted literally the world’s best technology for high-performance magnets. Japanese corporations were manufacturing superb Neodymium magnets that emitted the world’s highest level of magnetic force. They were widely deemed indispensable to downsizing, lightening, size and weight reduction, and energy conservation in product areas such as automobiles, integrated circuits, household electric appliances, medical care, environmental, and energy. In an effort to wrest this coveted technology away from Japan, China approached three leading Japanese manufacturers of high-performance magnets—Hitachi Metals, Ltd., Shin-Etsu Chemical Co., Ltd., and TDK. The Japanese government attempted to no avail to prevent the three firms from entering the Chinese market, with the trio subsequently setting up joint ventures with Chinese corporations. As a result, Japan had it cutting-edge magnetic technology completely taken away by China.
The Japanese government was ineffective in blocking the transfer of the treasured technology because the three corporations failed to come to grips with the seriousness of the matter. But Hosokawa warns that what is ongoing is far more serious:
“Beijing is now plotting to buy out a whole group of Japanese companies instead of enticing individual Japanese companies to invest in China.”
Of course the Ministry of Economy, Trade, and Industry (METI) keeps a watchful eye on any transfer of state-of-the-art technology. As regards the transfer of technology for high-performance magnets, the ministry has frequently attempted to intervene. Even so, the Chinese have succeeded in wresting technologies away from Japanese companies by craftily luring them into embarking on joint ventures. But now, they have found a much easier method—buying up groups of corporations they have targeted.
Deplorable Lack of Sense of Responsibility
When it comes to Chinese investments in Japan, jurisdiction is transferred from the METI to the Finance Ministry. Seen from the Chinese side, however, Japan’s foreign capital investment regulations are far from perfect, with enough holes for the Chinese to take advantage of. There is plenty of room for the Chinese to cheat Japan well within the regulations now in place. Besides, prices are relatively low in Japan due to years of deflation and low economic growth, which have made real estate and companies easy to acquire.
This has spurred China on to make a list of critical technologies owned by Japanese corporations across the board, investigating which specific entities have what the Chinese covet.
In Japan, major corporations alone do not necessarily own world-class, leading-edge technologies on a par with any of the world’s major international corporations. In point of fact, medium-sized and small companies boasting outstanding technologies support Japan’s industrial foundations. The Chinese are aiming to discover which of these companies own the technologies they crave and then trying to take them over. Surprisingly, some major Japanese trading companies are involved in these transactions, warns Hosokawa.
These are leading trading firms well-known to most Japanese, according to Hosokawa, who notes that they take advantage of their credibility in approaching targeted Japanese corporations to help the Chinese buy them up. If so, aren’t they the vanguard in selling off Japan to China? Cutting-edge technologies are the very foundation of Japan’s national power. Do these trading firms value profits from business over safeguarding critical technologies on Japan’s behalf? Is it their business to sell out Japan? They absolutely lack any sense of responsibility or loyalty to the very nation that has made the existence of their companies possible.
In Ukraine, people from the president down are putting their lives on the line each passing day to continue fighting to defend their country. I wish to stress that our government, big corporations, and all Japanese must learn from Ukraine how sincerely they love their country and are committed to defending it at all costs. Otherwise, Japan will quite be easily taken over by China before long. I urge the two ministries concerned to expeditiously fill the holes in the relevant laws and come up with thorough measures to safeguard the economic security of our nation. Beginning with major corporations, the Japanese economic community must strictly value our national interests over commercial gains. Let us bear in mind that we can all prosper only because the state makes that possible in the first place.
(Translated from “Renaissance Japan” column no. 998 in the May 5-12 combined issue of The Weekly Shincho)