Japan's lower house on Thursday passed a bill for promoting economic security, putting it on track to be enacted in the current regular parliamentary session as the country faces growing geopolitical risks associated with Russia and China.

The bill calls for strengthening supply chains to stably procure semiconductors and other vital products and stipulates steps for preventing the leakage of information pertaining to the nuclear and defense fields.

With the new law, Japan seeks to be in step with the United States and European countries, which are more advanced in promoting economic security, as China's rise has intensified global competition in the high-technology field while the security environment is rapidly changing amid Russia's invasion of Ukraine.

The House of Representatives passes a bill for promoting economic security at a plenary session in the parliament in Tokyo on April 7, 2022. (Kyodo)

The bill passed the House of Representatives with support from the ruling Liberal Democratic Party and its coalition ally Komeito as well as opposition parties, including the Constitutional Democratic Party of Japan. It is now set to be voted on in the House of Councillors.

Under the envisioned law, the government will designate goods such as chips, pharmaceutical products and rare minerals as critical items to be closely monitored and for which it will financially support suppliers to help them stably procure them.

The government will also facilitate the development of artificial intelligence and other cutting-edge technologies through public-private cooperation by providing information and financing.

In the infrastructure area including telecommunication and transportation, the government will screen equipment that operators plan to install to mitigate vulnerability to cyberattacks and prevent use of parts from overseas that could pose security threats.

New rules will be introduced to make certain patents related to sensitive technologies nonpublic.

As there is a concern that excessive involvement by the government in the private economy could hinder corporate activities, it will be required to act with caution.

After the main opposition CDPJ expressed such worries, the ruling coalition led by the LDP has added a nonbinding resolution to the bill stating that the independence of business activities shall be respected.

In March, Japan's largest business lobby the Japan Business Federation, also known as Keidanren, along with the Japan Chamber of Commerce and Industry and the Kansai Economic Federation, requested the government to reduce the burden on businesses upon implementing the envisioned economic security law.

The resolution also called for considering imposing penalties on firms that refuse government probes into supply chains, reflecting a request from the Japan Innovation Party, a minor opposition force.


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