Japan Aiming to Be at Core of Global Supply Chains for Key Goods

Jiji Press

11:05 JST, June 5, 2023

TOKYO (Jiji Press) — The Japanese government is expected to say in a key economic policy platform that the country aims to be at the core of global supply chains for strategically important goods such as next-generation semiconductors by ramping up investment in the areas, it was learned Saturday.

The goal is included in a draft of the government’s annual economic and fiscal policy guidelines. The government aims to adopt this year’s guidelines in mid-June after coordination with the Liberal Democratic Party-led ruling coalition.

On fiscal reconstruction, the government will maintain its target of turning around the combined primary budget balance at the state and local governments in fiscal 2025 although the target year will not be written into the guidelines for the second straight year.

The U.S.-China rivalry and Russia’s invasion of Ukraine are making it increasingly necessary to rebuild supply chains among like-minded countries.

The leaders of the Group of Seven major countries — Britain, Canada, France, Germany, Italy, Japan and the United States — said in a joint statement adopted at their meeting in the city of Hiroshima last month that they will work on strengthening the supply chains for mineral resources and semiconductors as a key challenge on the security front.

The Japanese government plans to make long-term investment in projects related to green transformation and startups, aiming to leverage it to shore up private-sector investment as part of its efforts to resolve social challenges. The government will also step up investment in semiconductors and other strategically important goods to expand Japan’s supply and export capacity.

On turning around the primary budget balance, the government omitted the target year from the 2022 economic and fiscal policy guidelines, in consideration of LDP members in favor of active spending. The government will do the same for this year’s guidelines while planning to assess progress in its economic and fiscal reforms in fiscal 2024, which starts next April.

The 2023 guidelines will show the government’s expectations for the Bank of Japan to realize 2% consumer inflation that comes with wage growth, according to the draft.

As to hikes in minimum pay, the government will hold discussions at a related labor ministry council, including on the possibility of realizing the national weighted average wage of ¥1,000 or more per hour this year, the draft says.

Elsewhere in the guidelines, the government will show specific plans to build next-generation reactors at nuclear power plants that are set to be decommissioned.

The draft says Japan will lead discussions on making international rules on the use of and regulations for generative artificial intelligence while aiming to reinforce Japan’s ability to develop AI tools.

The government will work with the private sector on expanding the use of the My Number card for personal identification now that more than 70% of all people in Japan have applied to obtain the card, the draft says.