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Japan’s long game: Investment and resilience in an uncertain world
One of the main themes of this year’s World Economic Forum is how industries, regions and countries prepare for disruption, from geopolitical tensions and economic uncertainty to climate-related risks and technological change.
READ MORE : http://www.euronews.com/2026/01/21/japans-long-game-investment-and-resilience-in-an-uncertain-world
Subscribe to our channel. Euronews is available on Dailymotion in 12 languages
One of the main themes of this year’s World Economic Forum is how industries, regions and countries prepare for disruption, from geopolitical tensions and economic uncertainty to climate-related risks and technological change.
READ MORE : http://www.euronews.com/2026/01/21/japans-long-game-investment-and-resilience-in-an-uncertain-world
Subscribe to our channel. Euronews is available on Dailymotion in 12 languages
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NewsTranscript
00:00Global geopolitical and economic shifts are creating new challenges.
00:04So how is Japan using strategic investment to strengthen resilience at home and abroad?
00:09We talked to a panel of experts at the Euronews Hub at the World Economic Forum to find out,
00:15and here are some highlights of what we heard.
00:24Mr. Yoshito, I would like to start with you, if that's okay.
00:27Can you begin by giving us some context about the state of the economy in Japan, please?
00:33Let me talk about the economy by three points.
00:36One is about the stock markets first.
00:39The stock market has risen to 54,000 Nikkei, which is twice in three years, double in three years, and triple in five years.
00:48Second is about unemployment and wages.
00:52Unemployment right now is about 2.6%, which is very low.
00:55And the wage is up by 5%, so therefore you can tell.
01:00And we have been, Japan has been suffering for deflation for about 30 years.
01:04But now we have, finally, BOJ is raising interest rate.
01:08And right now, official rate is 0.75%.
01:12So we can tell that the economy is booming.
01:16Thirdly, let me talk about primary balance, income balance.
01:20We have more than $500 billion income balance in terms of dividends and also interest and capital gain coming per year, which is 130% of our current trade surplus.
01:35And that means, like, even though we lost a lot in terms of trade, you know, we have the largest credit nation.
01:42And therefore, we can tell that we are rich in terms of the economy.
01:46Japan has identified 17 strategic fields to secure growth and economic security, as we heard.
01:52And it's a very volatile world.
01:54So at Davos, where competitiveness and resilience are top of mind, what makes Japan's approach distinct from other advanced economies who are pursuing industrial strategy?
02:06The approach of Japan is quite different from the U.S. or China.
02:11In case of the U.S. or China, it's more about top-down approach and pinpoint and winners.
02:16And they support, subsidize them.
02:18In case of Japan, it's more about a bottom-up approach and more consensus and ecosystem approach.
02:23Let me explain about what it is.
02:25The approach is most like a build consortium of leaders.
02:30And then let them share information and let them divide the scope of work in terms of research.
02:36It's not just picking the winners.
02:38It's more about picking the industry that Java should support and, at the same time, trying to foster the industries.
02:46So it might take longer than other countries.
02:49But in the end, the ecosystem will be built.
02:52And therefore, the stronger fundamental technology and those industries will be built.
02:56Kumiko, what feels genuinely new about this strategy compared with Japan's past industrial policies?
03:05It is so notable that Prime Minister Takaiichi has positioned these economic security measures or strategic investment fields as growth opportunities.
03:18Growth investment is easy to understand.
03:20You can focus on your winning area and grow it more.
03:24But crisis management investment, according to her, is that Japan can be a leader in the leader position to countermeasure for the potential risks that not only Japan,
03:36but also the other countries globally would face.
03:40The economic security challenges, food challenge, food security, energy security, and all these health and agriculture securities.
03:47So we wanted to tackle these challenges with our cutting-edge technologies, the cooperation between public and private,
03:55so that Japan can be a leader leading the initiative and show to the other countries how we can complement each other to respond to our vulnerability from the economic security point of view
04:08and make it as a growth engine.
04:10I'm with the Klingendal Institute in The Hague, and we focus on the geoeconomic landscape.
04:21And I'm sorry to have to say here that the positive outlook for the Japanese economy that we heard is even more impressive when you look at the outside world,
04:35where we see a revisionist China that has been coercing Japan and Europe, weaponizing trade and economics.
04:43We've seen a revisionist Russia as well, invading Ukraine and threatening NATO and its allies.
04:52And unfortunately, now also it seems that we are faced with a revisionist U.S. administration that is pulling out of the multilateral system.
05:01Given all that, with the U.S. leading both Japan and Europe basically into an era of globalization,
05:09we're now being led back from that era.
05:11And that is quite a challenge for both our regions.
05:15What does that mean for our economic security and resilience?
05:18I think both Japan and Europe are in the same pickle.
05:24And that pickle is that our economic interdependencies now have proven to be vulnerabilities.
05:29And I see basically three avenues out of there where both Japan and Europe are going to go on.
05:35The first is keep promoting and leading the free trade system through the WTO, but also by signing new trade agreements with like-minded partners.
05:45The second is we really have to consider more forcefully to also protect our domestic markets against economic coercion and also against the vulnerability,
05:57against overcapacity in strategic industries.
06:00And then the third and perhaps the most ambitious avenue is seeking security through strategic investment.
06:08Jolt, how resilient is manufacturing in Japan and Europe in the wake of the recent global shocks that we've seen?
06:16Donald Trump has imposed massive tariffs on all over the world.
06:22And the news is full of reporting that China recorded the highest export ever.
06:28But if you look at Japan and Europe, they are similar and they are doing very strong.
06:33I mean, we just looked at the latest November 25 data for Japan.
06:39And export as a share of GDP, again, we have a roughly monthly GDP approximation, was highest in November last year than compared to the previous year.
06:49If you look at Europe, you see the similar tendency.
06:53So exports to the United States declined, obviously.
06:57But overall exports is still doing very well.
07:00From a research and analysis perspective, how is Japan's strategy fitting in with the U.S. and China tensions that we're seeing?
07:10I have to always talk about economic security viewpoint.
07:13It all comes down to the strategic autonomy and also strategic indispensability.
07:19When you think about Japan, actually Japan is really a resource-poor country.
07:26So for now, what we are trying to do in the current administration is we need to increase or enhance our strategic indispensability,
07:35which means Japanese products, Japanese technology, Japanese know-how is something that is needed for other countries, other territories, other companies,
07:45so that we are someone who is needed in the international scene, so that we can have this autonomy by balancing our risk between different territories or topics.
07:58You mentioned technology there, Mr. Yoshito.
08:00You know, what is the state of tech startup now, especially in the VC environment?
08:05When Prime Minister Abe came into power, he focused on entrepreneurship and more technology and startups.
08:15So since 2013, venture capital raise amount has risen 10 times since 2013.
08:24It was right now roughly about 8.4 billion in 2013.
08:28And before that, it was only about 870.
08:31So it has risen by 10 times in 10 years.
08:34It's impressive.
08:34In 1999, when I raised capital, that time, it was right after Asian financial crisis.
08:42I was able to raise about 20 billion yen, but it was only 90% came from the outside of Japan.
08:49Only 10% came from Japan.
08:51It was difficult to convince financial institutions, pension funds to invest into venture capital.
08:58The last fund we raised is four times bigger than the fund in 1999.
09:0390% of capital came from Japan, including government institutions like JIC and also GPIF.
09:12And growth is one of the top agenda of Takaichi administration.
09:16So you can tell that there are new things happening.
09:21And tech startups are coming up as well.
09:22Jolt, what EU policies do you think are in place that really foster innovation?
09:28For example, if you look at Scandinavian countries, in particular Denmark and Sweden, they have highest private research and development spending.
09:38In global innovation scores, they rank very, very topically.
09:43They have a number of companies which were able to grow from being a small company to mid-size and reaching global scale.
09:51So something is known by these countries.
09:53And, you know, the secret is difficult to figure out.
09:57But certainly it's a kind of a combination of good domestic regulatory standards, including labor regulation.
10:04But also the European levels.
10:05For example, the European Research Council and Innovation Council, which largely follows a bottom-up approach.
10:10They may not top down, you know, setting centrally what are the future innovations and strategic places to go.
10:18But rather let entrepreneurs and innovators to come up with ideas and having an independent assessment of them.
10:25I think that's the most successful way to foster innovation.
10:28Kumiko, I'd like to expand a little bit on the risk elements that we've been hearing about.
10:33And from a geopolitical risk perspective, Japan's strategy seems deeply shaped by uncertainty, you know, from supply chains to regional security.
10:43How are these risks influencing corporate and investor decision-making inside of Japan?
10:50PFC Japan has been offering the service of geopolitics and economic security ever since 2016, when Brexit happened.
11:00And also the Trump administration 1.0 was there.
11:03But then the Russian invasion to Ukraine happened.
11:06And then that's really the wake-up call for – because U.S.-China trade war was impacting certain part of Japanese business, but not all of them.
11:17But when Ukraine happened, a lot of the Japanese CEOs realized if that happens, maybe something which is much closer to us could happen in some time.
11:28And what if?
11:29So that was the wake-up call for Japanese companies, and we started to have a lot of requests to work on a project about what's going to happen in the street.
11:39We tried to talk to the companies.
11:41It's not about the crystal ball reading.
11:43It's about the scenario planning.
11:45You have to have different potential scenarios, and you have to make sure that you compare that, your strategy with the scenarios, potential scenarios, good and bad.
11:56And you have to make strategic decisions until which point you prepare to mitigate the risk or until what kind of risks you can swallow still having the business going on.
12:09I hope you've brought your crystal ball with you for our next question.
12:12Five to ten years from now, how should the world and also separately Japan be measuring their success?
12:22Well, that's a tough question.
12:24Well, first of all, I think AI will come in, and that will determine about the competitiveness of the company and also country.
12:34If you talk about AI in Europe, they think about fear or uncertainty because they're afraid of losing jobs.
12:43The same in the U.S. as well.
12:45But in Japan, it's different.
12:46Japan is a measure of unemployment rates.
12:49We have a labor shortage.
12:51Labor shortage means that we need to have more foreign people come in.
12:56At the same time, we have to utilize more female and also elderly persons as well.
13:02At the same time, we have to use AI as much as possible and robotics.
13:06And the approach of Japan in terms of AI and robotics is very different from the U.S. or Europe because we have been used to animation or manga.
13:15So the acceptance of society into AI is quite good.
13:19At the same time, Japanese companies are kind of securing jobs by even though we adopt new technology, we retain the employees, we educate them so that kind of like job security is there.
13:33I'm going to ask the other panelists if they can, in one sentence, answer what is the single most important factor that will determine whether Japan successfully moves from strategy to strength.
13:50So, Jan, we'll start with you on the end.
13:52If I may comment it from a European angle, a success would be if the Japanese ecosystems manage to successfully co-invest with European industries in the challenges of tomorrow for resilience and technology development.
14:10I think the success would come if new innovators and new innovations will be able to bring and also challenge incumbents.
14:19In Japan, there are lots of big companies.
14:21They are doing well.
14:22But I think they also need some shakeup to be more productive and young innovators can make that shift.
14:29I would echo what the theme of this year's Davos dialogue, dialogue and collaboration, because no one state can establish economic security stand-alone.
14:43I think for the humanity of the world, we have to move forward for discussing about climate change and also about AI regulations.
14:51We'll leave it here, but you can watch the full debate on Euronews.com.
14:55Thanks for watching.
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