[Salon] Defending Japan

[Chas Freeman <cwfresidence@gmail.com>]

September 22, 2023

Hello from Tokyo. When I was a beat reporter covering Japan-U.S. relations, one of the phrases I heard most from people in Japan's Defense Ministry and Self-Defense Forces was the importance of "interoperability with the U.S. military." This meant that in order to conduct joint military operations in various situations with the U.S., which has many bases in Japan as its biggest ally, commonality of things like communications systems and military equipment was crucial. Indeed, that has long been the rationale for large purchases of U.S.-made weapons by Japan. That is why Tokyo's decision to develop a sixth-generation fighter with the U.K. and Italy came as a great surprise. It was well known that joint development with the U.S. was not very profitable for the Japanese defense industry because important technologies were kept in a so-called black box. Under the new trilateral framework, called the Global Combat Air Programme (GCAP), mass production and overseas exports are on the horizon, which could help revive Japan's declining defense sector. Over the past two decades, more than 100 Japanese defense companies have left the industry due to the tough business environment. The average operating profit margin has stagnated around 2% to 3%, with some even recording occasional losses, due to high material costs and delivery delays. Sales of products have been almost entirely limited to the Japanese Self-Defense Forces, and the small scale of production has stoked the profit challenges. Elsewhere in the region, Taiwan may be outpacing Japan in the urgency of developing its own defense capabilities. Amid rising tensions with China under President Xi Jinping, Taiwan's long-secret plans to build its own submarines will be revealed to the world with the first public appearance of a vessel in the southern port city of Kaohsiung. But whether the multibillion-dollar program, some seven years in the making, will prove a strong deterrent to Chinese aggression remains to be seen. Meanwhile, the global consolidation trend, driven by the huge investments needed to roll out 5G and build digital economies, is accelerating. Norwegian telecom giant Telenor completed two blockbuster mergers in Malaysia and Thailand as part of a restructuring of its holdings to ensure its longevity in Asia. Our Business Spotlight examines that strategy, based on an exclusive interview with the CEO of Telenor Asia. New York, where the United Nations General Assembly is currently taking place, is home to the headquarters of The New York Times. Its distinctive glass building has become one of the city's landmarks. Italian architect Renzo Piano, the designer of this skyscraper, shares his life story and his connection to Japan with Nikkei's Ayako Ota. We will be hosting another semiconductor webinar. Please join us on Sept. 26 for the event with Chris Miller, author of "Chip War," G. Dan Hutcheson, vice chairman of TechInsights, and Nikkei Asia Chief Tech Correspondent Cheng Ting-Fang. Wishing you a wonderful weekend! Shin Nakayama Editor-in-chief, Nikkei Asia