Japan passes law aimed at China guarding economic security, technology, supply chains

The law imposes tighter oversight of Japanese firms working in sensitive sectors or in critical infrastructure, and calls for more protection against hacking

It comes after the United States imposed restrictions on technology imports, such as semiconductors, amid growing tension with Beijing

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Visitors look at a Kawasaki Heavy Industries Ltd. medical robot at an exhibition in Tokyo earlier this year. Japan’s economic security bill aims to guard technology and impose tighter oversight of firms working in sensitive sectors. Photo: AFP

Published: 1:45pm, 11 May 2022

Japan’s parliament on Wednesday passed an economic security bill aimed at guarding technology and reinforcing critical supply chains, while also imposing tighter oversight of Japanese firms working in sensitive sectors or in critical infrastructure.

Measures in the legislation, which is primarily aimed at China, will be implemented over two years once it is enacted, according to the bill. It comes after United States imposed restrictions on technology imports, such as semiconductors, amid growing tension with Beijing.

The new law also arrives as Russia’s invasion of Ukraine – Moscow calls its actions “a special operation” – adds pressure on Japan to do more to protect supply chains and infrastructure from hacking and cyberattacks, and ensure that technology critical to national security is not stolen.

A Japanese container ship is seen docked at Shanghai’s Yangshan Port last month. The new law adds pressure on Japan to do more to protect supply chains. Photo: Xinhua

It will give Japan’s government the power to order companies to notify it of software updates and vet some equipment procurement in 14 industries, including energy, water supply, information technology, finance and transport.

The legislation also provides subsidies for companies to help them strengthen supply chains against disruption such as shortages of components shipped from overseas. It further establishes a system for government officials to make on-site inspections at firms.

The new security mechanism it sets out promises government money for research and development into key technologies deemed important for economic security.