SSU Forum “Japan’s Effectiveness as a Geo-Economic Actor: Navigating Great-Power Competition”

With the growing inclination of both China and the United States to use economic power in their strategic competition with each other, the concept of geo-economics has recently garnered particular attention. To navigate this great-power competition, it is time for middle powers such as Japan to assess the effectiveness of their geo-economic strategies. How has Japan become a geo-economic actor in the post-war era, and how has its understanding of geo-economics evolved? What has Japan’s geo-economic strategy entailed, and how effective is it in achieving its foreign policy goals? These are some of the main questions answered by a new Adelphi book by Robert Ward, IISS Japan chair and director of geo-economics and strategy, and Yuka Koshino, IISS research fellow for science and technology policy, titled “Japan’s Effectiveness as a Geo-Economic Actor: Navigating Great-Power Competition.”

On July 28, the Institute for Future Initiatives’ Security Studies Unit (SSU) hosted Robert Ward and Yuka Koshino at the University of Tokyo. The authors delivered keynote remarks on their book and answered questions from the audience. The event began with opening remarks from Akio Takahara, head of the SSU unit and a professor at the University of Tokyo’s Graduate School of Law and Politics. The discussion was moderated by Ryo Sahashi, associate professor of international relations from the University of Tokyo.

Keynote presentations

Ward’s remarks
Ward began his remarks by reflecting on Japan’s remarkable transformation into a key player in both regional and international affairs in the past decade. He pointed to China’s rise to power as a primary reason for Japan’s proactiveness in the 21st century and singled out Prime Minister Shinzo Abe, who realized both the opportunities and the challenges that a rising China had brought as a result of the country’s transformation. With Japan taking a tougher stance against the recent Russian invasion of Ukraine, Ward argued that Japan’s activism as a member of the Group of Seven (G7) will persist in the post-Abe era.

Ward explained that their new book sought to understand the drivers behind Japan’s transformation and trace the development of Japan’s geo-economic power, which “Japan possessed but had been reluctant or unable to flex fully,” despite having attained the status of an economic superpower by the 1970s. Defining geo-economics in the book as a country “deploying economic instruments to secure foreign policy aims and project power,” Ward argued that the concept of geo-economics is critical for Japan given the constitutional constraints on the country’s military statecraft. He indicated that to Abe, geo-economics is a means that Japan can use to counterbalance China’s growing capability and influence. How effective the country’s geo-economic strategy can be in achieving its foreign policy goals thus becomes a question worth considering. After all, according to Ward, it is the responsibility of Japan and other middle powers to act in their own interests and “prevent great powers from exerting exceptionalism” and “rewriting the rules as they wish.”

After discussing how their book traces Japan’s journey to becoming a geo-economic power, Ward indicated that the 2010s has been the most transformative decade for the Japanese government since the end of the World War II. He pointed out that the Abe administration underwent a mix of internal balancing—structural policy changes such as the 2015 security legislation and the announcement of “Abenomics,”—and external balancing, which included developing the Freedom and Open Indo-Pacific (FOIP) vision in 2016 and taking a leadership role in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Ward concluded with some final thoughts on Japan’s future position in the world. First, he argued that there is no return to an inward-looking stance because “to do so is to suggest acquiescence by Japan to China’s regional hegemony.” Second, while he did not foresee a “revolutionary scenario,” such as a massive change to the country’s constitution, to boost Japan’s geo-economic power, Ward believes that Japan will be able to project its power “reasonably and effectively” by maintaining its economic interoperability with the United States and other like-minded countries and playing an active role in setting rules in new domains such as cybersecurity, and space.

Koshino’s remarks
Koshino’s presentation focused on a chapter of their book highlighting four factors that could affect Japan’s implementation of its geo-economic strategy in the context of the U.S.-China strategic competition. First, Koshino pointed to the outwardness of the country’s diplomatic posture. While prime minister Abe and his successor have transformed Japan from an inward-looking shimaguni (island-country) to a key player in regional and international affairs, she expressed concern about the sustainability of the country’s current proactive stance. Having observed Japan’s strict border restrictions during the Covid-19 pandemic, she emphasized that a Japan that is more open to the world would be more capable of strengthening its existing partnerships and expanding news ones.

According to Koshino, the second factor that could undermine the country’s implementation of its geo-economic strategy is the fragmentation between the policy-making community and the greater Japanese society. While the government has made new attempts to tackle geo-economic issues, including the establishment of an economic division within the National Security Secretariat, Koshino pointed out the challenges that may come from the government’s relations with the nation’s industries. She observed that many industries are yet to be convinced about the government’s plans for critical technologies such as 5G and AI and underscored that government-industry coordination is “critical to the resilience of Japan’s geo-economic strategy.”

Koshino next identified a potential ideological challenge to Japan’s implementation of geo-economic strategy. She argued that anti-militarism culture, which remains strong in Japanese society, has impeded interactions between the defense and civilian sectors, whose coordination is required in protecting against the outflow of the country’s sensitive technology to foreign competitors. She maintained that this ideological challenge could limit not only Japan’s geo-economic competitiveness but also its ability to shape the global rules and norms in the realm of technology and innovation.

Lastly, Koshino pointed out that Japan’s management of its alliance with the United States will be critical in pursuing its geo-economic interests. She called attention to the potential risk behind the two countries’ attempt to coordinate their approaches on economic security issues by noting that it could “turn [Japan] inward” and reveal their divergence.

Koshino closed her remarks by identifying three key elements to maintaining Japan’s geo-economic effectiveness: the importance of maintaining its economic health to project its economic power and sustain its strategy, the need to continue investing in its security to protect geo-economic interests, and the need to improve military-civilian interactions to strengthen its competitiveness in technology and innovation.

Q&A
Following their remarks, the floor was open to questions from the audience. Ward and Koshino addressed questions about the so-called rules-based international order, including but not limited to the following: What rules should Japan observe and advocate in the economic sphere? What is the attractiveness of upholding a rules-based order to developing countries? In response, Ward and Koshino emphasized the rules that promote “openness” and “freeness” in the economic arena. What Japan has been attempting to do, according to Ward, is to try to formulate a policy, such as FOIP, that is inclusive enough so that small countries do not feel the need to choose sides between China and Western countries. Koshino also noted that it’s essential that Japan not only maintains the rules already in place but also takes a leadership role in creating norms in new areas such as AI or space.

There were questions about Japan’s current geo-economic posture. For example, responding to the question asking about Kishida administration’s announcement of a new form of capitalism, Ward argued that the initiative is an important statement of intent to demonstrate where Japan situates itself, particularly following the Russian invasion of Ukraine. Koshino indicated that the details of the idea have yet to be fully developed and questioned whether there could be a political calculus behind the concept.

In the Q&A session, they also had a chance to clarify the meanings of specific terminologies used in their book, such as the difference between geo-economics and geo-politics, and what it means for Japan to have economic interoperability with the United States.

Concluding the session with a future outlook, Ward and Koshino recommended an interdisciplinary approach to understanding policies from different dimensions to cultivate the next generation of geo-economic experts.

*The conference was organized by subsidies from the Ministry of Foreign Affairs of Japan.

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