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Chinese spies stealing Japanese industrial secrets in boardrooms. Chip smugglers ferrying Nvidia’s prized artificial intelligence semiconductors via Japan. Drug gangs quietly slipping fentanyl across Japan’s borders to a US opioid crisis.

Across a range of industries, Japan’s economic security vulnerabilities have been on display in a slew of recent incidents.

The cases show how foreign actors increasingly see Japan as an attractive target – and, in some instances, a convenient gateway – for espionage and other illicit activities.

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“[Prime Minister Sanae] Takaichi is pushing forward through the menu of economic security policies that policymakers, bureaucrats, even academia have been advocating over the last few years, and actually implementing it,” said Akira Igata, who leads the Economic Security Intelligence Lab at the University of Tokyo.

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The new legislation also expands pre-screening requirements to cover certain cases of indirect ownership and gives the authorities broader powers to examine transactions by high-risk investors – such as foreign governments or state-controlled entities – even outside traditionally sensitive sectors.

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Japan’s foreign investment pre-screening filings have climbed in recent years since a previous overhaul of the Act in 2019.

Before then, foreign activist funds could acquire up to 10 per cent of a company’s shares without government scrutiny.

But after, the threshold was lowered to 1 per cent, capturing far more attempts by activist investors to influence target companies.

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Yuzo Murayama, professor emeritus at Doshisha University, credits the government and police for devoting “considerable resources” to the issue and in turn garnering attention from business owners.

The administration is heavily promoting the development of dual-use technologies – items with civilian and military applications – highlighting how the products can both fuel the economy and protect domestic supply chains.

“The Takaichi administration came into office and began talking about turning the defence industry into a growth industry,” Murayama said. “I think that has significantly raised awareness.”

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