Japan to Push Legislation Excluding Chinese Products from Critical Infrastructure

[Asia Economy Reporter Lim Chun-han] As the United States intensifies pressure on Chinese telecommunications equipment companies such as Huawei, Japan is also aligning its efforts by moving to create legislation that encourages the exclusion of Chinese products from critical infrastructure.

On the 14th, the Yomiuri Shimbun reported that multiple ruling party and government officials revealed that the Japanese government intends to include such provisions in the "Economic Security Promotion Bill" (tentative name), which will be submitted to the regular Diet session next year, specifically regarding the maintenance of infrastructure functions.

According to the report, the Japanese government plans to incorporate into the bill a system where the government conducts prior screening to prevent operators in sectors such as telecommunications, energy, and finance from introducing foreign products or systems that could pose security threats when constructing critical facilities. The bill envisions excluding Chinese-made products that could affect the stable operation of infrastructure. The newspaper noted that this aligns with recent moves by the U.S. government.

U.S. President Joe Biden signed the Secure Equipment Act on the 11th local time, which prohibits the Federal Communications Commission (FCC) from authorizing products from certain companies. This measure is interpreted as targeting Chinese telecommunications equipment companies such as Huawei and ZTE. Huawei and ZTE are listed on the U.S. Department of Commerce’s blacklist restricting transactions with American companies, and the FCC classifies these companies as national security threats due to their connections with the Chinese Communist Party and concerns over espionage activities.

The Economic Security Promotion Bill is also expected to specify support measures aimed at strengthening the domestic production base of semiconductors in Japan. The plan includes providing subsidies for factory construction and attracting foreign companies or encouraging the return of domestic companies to Japan to avoid delays in the supply of semiconductors and related products.

Through Economy, Trade and Industry Minister Koichi Hagiuda, the Japanese government has even declared its intention to "secure the necessary budget and swiftly establish a multi-year support system" to fully support Taiwanese semiconductor company TSMC, which plans to build a factory in Kumamoto Prefecture. The semiconductor shortage caused by supply chain disruptions amid the COVID-19 pandemic, which led Japanese automakers to reduce production, appears to have influenced the legislative preparations. Japan currently relies on imports from Taiwan, China, and others for about 60% of its domestic semiconductor demand.

The bill is also expected to include provisions for keeping patents confidential. This aims to prevent the leakage of advanced technologies that could be used in next-generation weapons development. Currently, Japan’s patent system discloses application details after a certain period. The government is also considering a system that allows information and funds it holds to be provided for advanced technology research such as artificial intelligence (AI). The legislation will be designed with the future use of private-sector technology in defense fields in mind.

Economic security is one of the key policy tasks of the Kishida Fumio Cabinet. When the cabinet was formed last month, Prime Minister Kishida established a ministerial post responsible for economic security and cited economic security as one of the growth strategies to realize "new capitalism" during his inaugural press conference. He plans to hold a ministerial meeting on economic security on the 19th to concretize the Economic Security Promotion Bill.

This content was produced with the assistance of AI translation services.