Travelling forms. And maintaining relationships in a world whose order has finally gone haywire with Russia’s war of aggression against Ukraine is becoming more important anyway.
Against this background, Chancellor Olaf Scholz (SPD) will fly to Tokyo with a large part of his cabinet on Friday. The first official government consultations will take place on Saturday – a format that already exists with ten countries. On top of that, Japan is leading the G7 industrialized countries this year.
But there is also a special interest of the federal government that has to do with the economic policy experiences of the recent past: First, the pandemic revealed how badly German companies suffer from disrupted supply chains with China, for example; and last year the country had to detach itself from its dependence on Russian energy at great pressure and at great cost.
This is a wise middle ground that we want to learn from.
State Secretary for Economic Affairs Franziska Brantner (Green) on the Japanese mix of interconnectedness and caution
Since then there has been a lot of talk about strategic or economic sovereignty that needs to be established in Germany and Europe. What would happen, for example, if the rare earths for the high-tech industry, 80 percent of which are mined in China, were no longer supplied?
Much can be learned from Japan in this respect. The topic of raw material security is “high on the agenda” during his visit, said the Chancellor on Thursday in the Bundestag.
“In terms of economic sovereignty, Japan could be a role model for Germany,” says Green Franziska Brantner, State Secretary in the Ministry for Economic Affairs and Climate Protection of party colleague and Vice Chancellor Robert Habeck: “We will talk at the first government consultations about what we are going to do for the Federal Republic can and cannot.”
A separate ministry for economic security, which Japan introduced in 2021 as the first country in the world, will not be the same in Berlin. The government in Tokyo in the nation state of Japan can also jump to the side of companies with state aid in a different way than the strict rules of the EU internal market allow. However, Habeck’s ministry is following the specific measures that were bundled in an economic security law last year with interest.
“The Japanese economy is much more closely intertwined with China’s than ours – and has been consistently tackling the associated risks together with the government in Tokyo for many years without economically decoupling,” said State Secretary Brantner before the trip: ” This is a smart middle ground that we want to learn from.”
Not just full gas tanks
The Japanese law, which could soon also serve as a model for EU legislation, stipulates obligations for critical goods such as pharmaceuticals, semiconductors and rare earths. Anyone who imports them has to provide information about stock levels and conclude contracts with suppliers from different countries.
Japan keeps a state reserve for important raw materials for at least 60 days – not only in the energy sector, such as Germany with its gas storage facilities. “When raw materials are scarce, the Japanese state set up a fund ages ago,” says Brantner, “which invests directly in mining mines all over the world, for example.”
However, Japan also engages in “onshoring” and “friendshoring”, as it is called in business jargon. Derived from “offshoring”, i.e. the relocation of production abroad, not only future technologies are subsidized and settled in the own country. Companies are also funded if they expand factories in more democratic countries than China, i.e. if they invest in joy, so to speak. In the case of Japan, these are Asean countries like Vietnam.
So far there is nothing comparable in Germany: Existing guarantees are aimed more at securing investments in a critical political environment. Corresponding rules for the internal market are currently being created.
Japan also goes further than Germany when it comes to investment reviews. The last government of Chancellor Angela Merkel passed additional hurdles in the installation of components in the German IT infrastructure – such as the Chinese company Huawei. In Japan, a permit is required for the entire infrastructure area in order to protect it from sabotage.
Also, not only investments in Japan from a participation rate of just one percent are examined – Japanese companies, on the other hand, also have to register foreign investments in order to prevent a technology outflow in this way.
Protecting the economy will also be a key issue when Chancellor Scholz travels to Japan again in mid-May for the G7 summit in Hiroshima. There, decisions could be made for which Germany and Europe are already preparing.
For example, the EU Commission is working on its “Critical Raw Materials Act”, which could also provide for stress tests for corresponding supply chains of critical raw materials. So is Japan, while Britain has its entire economy subjected to a supply chain stress test.
In some form this should also happen in Germany. “We have to identify weak points in good time,” says Brantner, “so that we can take preventive action when in doubt.”
As early as January, your company presented key points on the “resilient supply of raw materials”. In it, for example, “a strategic state stockpiling of critical raw materials” is put up for discussion as well as a “raw materials fund to increase production capacities at home and abroad” – entirely based on the model of Japan.
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