Japan joins the anti-globalisation movement

It might not be as aggressive a position as the White House has entrenched itself in but limiting foreign ownership of strategic segments is a similar objection to globalisation.

According to The Telegraph, the Japanese government has identified 15 new sectors which would be restricted from foreign ownership, while restrictions on a further five would be increased. Any foreign investor wanting to take more than a 10% share of a companies listed in these segments would have to report to the Japanese government.

“…based on increasing importance of ensuring cyber security in recent years, we decided to take necessary steps, including the addition of integrated circuit manufacturing, from the standpoint of preventing as appropriate a situation that will severely affect Japan’s national security,” said a spokesperson for the Japanese government.

While telecom is already one of the sectors which has been listed for protection against foreign ownership, the new segments include mobile phone and the wider IT sector.

The rules themselves seem to be heavily nuanced to offer enough wiggle room for decision makers. At the very top level, should an investment be deemed contrary to national security, the Japanese government has granted itself the power to block or force changes to investment plans.

Although this might seem like another step on the road towards isolating China, sceptics are suggesting this is a plan to block the theft of trade-secrets by Chinese authorities and companies, it should hardly come as a surprise. After all, Japan is one of the countries the US has success in turning against China.

Last year, the Japanese government passed rules which would ban the use of phones, computers and other components from Chinese vendors in any of its agencies. Telcos have also been awarded 5G spectrum licences which come with coverage and security obligations, a move seen by some as a means to limit network exposure to Huawei. The telcos had in fact already committed to omit Huawei and ZTE from their network deployment plans, though an official position is a much stronger symbolic gesture.

There might be genuine security and economic concerns about China and its telco flagbearers, but the world is increasingly moving away from the concepts of openness. This announcement might only be a pebble in the global pond, but each pebble adds to the growing waves of isolationism.