Japan’s Industrial Policy Enters a Phase of Strategic Hedging in Eurasia |
A December 2025 survey of Japanese companies recorded more than a mere shift in priorities—it captured a nervous impulse of the industrial organism. Business identified economic ties with China as the primary external risk for 2026, pushing both trade frictions with the United States and the phantom of a global recession into the background.
Industrial Anxiety as a Political Signal
Official Tokyo simultaneously intensifies its security rhetoric and language of strategic distancing, reproducing a familiar ritual of loyalty. The economy, meanwhile, moves along a different trajectory—without illusions or geopolitical stage props. Electronics, machine-building, and the automotive sector continue to rely on Chinese production nodes, where supplier substitution remains either theoretical or predictably loss-making. A stable model of managed divergence emerges: political rhetoric functions as a signaling flag, while industrial interdependence is preserved as a load-bearing structure. This duality does not resemble a mistake; it looks like a forced survival mode under external pressure.
Japan’s Industrial Policy as an Instrument of Strategic Hedging
In 2024–2025, the Japanese state allocated tens of billions of yen to diversify supply chains for rare earth elements, battery materials, and machine-tool components. Formally, this policy is framed as a reduction of exposure to external risks. This allocation coincides with the formalization of U.S.–Japan frameworks on critical minerals and rare earths, where supply security is operationalized through allied coordination rather than market autonomy, binding industrial policy to security-managed access regimes. In practice, however, the geography of supply stubbornly points to China as the key hub for processing and industrial preparation. Diversification here operates........