Japan Inc. caught in dilemma in US decoupling campaign

Japan Inc. caught in dilemma in US decoupling campaign

– Japanese companies are increasingly mired in a widening economic division between the U.S. and China, driven by Washington’s accelerating moves to shut out Chinese companies such as Huawei Technologies from the U.S. and other markets.

“We will be troubled if we are urged to choose between the U.S. and China,” Chairman Hiroaki Nakanishi of the Japan Business Federation, the voice of big Japanese companies better known as Keidanren, said during an online press conference on Monday.

Japanese companies cannot avoid taking measures to cope with the U.S.’s moves, and the country is expected to toughen controls on exports involving products based on U.S. technologies and “sensitive” tech that could be converted to military applications.

When U.S. President Donald Trump slapped additional tariffs on Chinese imports two years ago, there was a view that the Sino-American trade war would not spill over to the other countries.

But the U.S. has rapidly reinforced economic security measures under the National Defense Authorization Act of 2019 and related laws, accelerating its economic decoupling from China and imposing pressure on the private sectors of its allies. Warning against the possible leak of information through joint studies with foreign parties, the U.S. government has called for its allies to increase security clearance personnel versed in both industry and economic security.

“Although Japanese companies are starting to consider how they should deal with China, it is difficult for them to become more committed to China,” said Kengo Sakurada, chairman of the Japan Association of Corporate Executives or Keizai Doyukai.