Japan’s Role in the Indo-Pacific: A Conversation with Shigeru Kitamura, Former National Security Adviser of Japan

Transcript

This transcription is automatically generated and edited lightly for accuracy. Please excuse any errors.

Joel Scanlon:

Good afternoon, everyone. I’m Joel Scanlon, executive vice president here at Hudson. It’s my great pleasure to introduce today’s event. Since its founding more than 60 years ago, Hudson has championed a strong and vibrant Japan and an ever stronger US-Japan relationship, what we believe is the most important alliance for the United States today.

The evolution in Japan’s strategic outlook over the past decade has been profound. Japan today is not simply a regional actor. It is a central pillar of Indo-Pacific security. The US-Japan Alliance has also evolved far beyond its traditional defense. It now encompasses coordinated efforts in economic security, supply chain resilience, intelligence, cyber, scientific and technological discovery, energy resilience, and the broader challenge of sustaining deterrence in an era of strategic competition. Few leaders have been as deeply involved in thinking through this convergence of security, economics, and technology as our guest today. It is our great honor to welcome Shigeru Kitamura back to Hudson Institute.

Kitamura’s son is one of Japan’s most consequential national security leaders. He served as Secretary General of Japan’s National Security Secretariat, as Director of Cabinet Intelligence, and as a close national security advisor to Prime Minister Abe.

In those roles, he helped shape Japan’s modern security architecture at a time when the Indo-Pacific was becoming more contested, more technologically complex, and more central to the future of global order. His work helped anticipate many of the debates Washington is now having how to protect critical technologies, how to build resilient supply chains, how to counter economic coercion, and how to strengthen alliances in the face of growing pressure from China.

This conversation is especially timely. Nowhere are the linkages between the economic and national security order more evident than in the Taiwan Strait, where deterrence, technology, trade, and alliance coordination all come together.

Kitamura-san will offer opening remarks, and then we’ll be in conversation with my colleague Jason Hsu, senior fellow here at Hudson. Jason brings a unique perspective as a former Taiwanese legislator, a leading voice on technology, defense and semiconductors, AI, and Taiwan’s role in the global security architecture. 

Again, thank you so much for being here. Also, a new book, Invisible Warfare. Some copies outside. Thank you so much for being here. Please join me in welcoming Kitamura-san.

Hon. Shigeru Kitamura:

Thank you, Vice Chairman, distinguished guests, National Security Leaders, and distinguished members of the Hudson Institute. We convene today at a critical juncture for the Indo-Pacific. As alliance structures deepen and the military capabilities expand across our region, we face a fundamental and urgent question. 

The future of the US-Japan Alliance, economic security resilience, and the strategic implications for the US-China relationship, Taiwan, and the broader region. To answer these vital questions, we must first confront the reality of the geopolitical environment we now inhabit. We must begin by acknowledging a preformed structured shift. 

The liberal assumption that defined the post-Cold War international order, that comforting belief that economic interdependence inherently promotes peace, has fundamentally shaken in the 21st century. For decades, we operated under premise that global economy integration would seamlessly align our strategic interests. However, while globalization undoubtedly deepen the economic bounds between nations, it simultaneously created a highly vulnerable structure where those very dependencies can be under being converted into strategic pressure.

Today, we must face the reality that economic interdependence is no longer value-neutral. It has been reinterpreted, redefined, and operationalized as an integrate component of national security. We see this paradigm shift most clearly in the strategic posture of the United States. Following a historic and comprehensive review of its relationship with China, the United States has transitioned its core policy access from engagement to strategic competition. It is crucial to understand this is not a transitory phenomenon tied to a single administration. 

It has been institutionalized as a bipartisan trajectory. The 2025 national security strategy of the United States explicitly articulates the intent to maintain strategic superiority in the Western hemisphere. And notably, it expands the domain of competition far beyond the traditional military sphere. It now encompasses economics, technology, supply chains, energy, and the defense industrial base.

In this context, economic security is no longer merely auxiliary line in foreign policy. It is positioned as a central axis of national strategy. This extends to trade policy as well. The additional tariff measures announced in April 2025, which introduce a mutual tariff framework adding country-specific surcharge to a baseline tariff, illustrate this performed shift. 

While the operational details of these measures fluctuated, and the judicial decisions and the policy adjustment. However, the critical takeaway remains. The conceptual approach to using trade as an instrument of national security is now firmly established. The United States no longer maintains a strict separation between economics and security.

This structure transformation fundamentally requires us to update our conceptual understanding of sphere of influence. Traditional geopolitics measures this fear primarily by geographic space. However, in the modern era, known geographic sphere of influence presses decisive significance. These modern spheres are forged and maintained through what we call functional choke points. 

I’m speaking of dominance over advanced semiconductor manufacturing equipment, critical logic chips, vital minerals, submarine cable networks, and energy transportation infrastructure. In today’s strategic landscape, dominance over these functional choke points translates directly into military superiority. Currently, we are witnessing the emergence of a notable and precarious dynamic, the loose strategic alignment among China, Russia, Iran, and North Korea, sometimes collectively deferred to as CRINK.

While this does not constitute a formal treaty alliance, they are deepening cooperation through military coordination, rapid technology transfers, and sophisticated sanctioning evasion networks forms a tangible strategic linkage. 

This development must be recognized as a direct challenge to the normative frameworks that underpin our international order. In this increasingly complex and volatile environment, Japan’s geopolitical weight has paradoxically increased. Situated on the eastern edge of Eurasia, Japan stands on the absolute frontline of a vital strategic space. 

The critical nexus connecting the Taiwan Strait, the East China Sea, and the South China Sea. However, Japan’s value is not solely geographic. Japan holds in a structured value in the realm of economic security. We serve as an indispensable cohort in global supply chains, particularly regarding semiconductor manufacturing equipment, advanced minerals, precision machinery, and critical components.

Therefore, as we discuss the future of regional architecture, Japan’s response cannot and must not be limited to mere defense adaptation. We cannot confine ourselves to seeking tariff exemption or making a temporary market adjustment. What is urgently required is a comprehensive strategic design, one that seamlessly integrate our rule-making capabilities with our capacity to implement alliances. The ideological foundation of this evolution is a concept of a Free and Open Indo-Pacific, or FOIP, first championed by the late Prime Minister Shinzo Abe. 

Let me be clear. FOIP is not merely a diplomatic slogan. It is a proactive vision to drive standard setting in infrastructure, the digital economy, and strait systems, all grounded in the uncompromising norms of the rule of law, freedom of navigation, transparency, and sustainability.

Economic frameworks such as the CPTPP and the Japan-EU Economic Partnership Agreement serve as an institutional foundation for this vision. These are not simple market access agreement. They encompass high-standard rules, including disciplines on state-owned enterprises, e-commerce regulations, rigorous intellectual property protection, and investment transparency. 

Japan alongside other responsible meter powers, must strategically utilize these frameworks not as alternative markets, but as part of the platform for known exportation. Thereby, building the inclusive security order these panels is debating. Simultaneously, to ensure stability, the US-Japan Alliance must transition from a shared ideal to rigorous implementation.

The US-Japan Security Treaty is comprehensive. Article Three mandates the maintenance and the development of defense capability. Article Four requires security consultations, and crucially, Article Two calls for economic cooperation and the elimination of friction in international economic policies. Operating these three elements in a fully integrated manner is a very core of alliance in the era of economic security. 

Central to this implementation is the concept of offset. This is not simply a matter of presenting figures for financial investment in the United States. To offset means systematically and institutionally inserting Japan’s indispensable capability into shared strategic goals, by securing vital goals in critical mineral supply chains, advanced semiconductor manufacturing, defense industrial cooperation, stable energy supply, and infrastructure standard-setting; Japan structurally binds its capabilities to US national interests.

Specific, tangible examples include our bilateral semiconductor technology cooperation, the joint development of glide phase interceptor, or GPI, and the strengthening of LNG supply chains. These initiatives must be positioned not as isolated policies, but as vital components of an integrated design that cuts across economics, the military, and the technology.

To manage regional emergency and the disruption of emerging technologies, our national security posture require three urgent priorities. First, we must rapidly strengthen deterrence, which, critically, includes the actualization of our counterstrike capabilities. Second, in regarding Southwest Islands, including Senkaku Islands, we must construct a seamless operational system between the Japan Coast Guard and the Self-Defense Force Navy, backed by robust bigger framework to respond decisively to gray zone situations.

Third, we must comprehensively prepare for hybrid warfare. We are currently engaged in an invisible war. Cyber attacks and information warfare are designed to paralyze state functions long before any physical clash of arms occurs.

Through the strict, transparent application of recently reinstated Security Clearance Act, coupled with Active Cyber Defense Registration, we must urgently enhance the resilience of our critical infrastructure and supply chains. Furthermore, regarding the DPRK threat, we must prepare strategically for a potential shift in international focus toward arms control.

While doing so, Japan must steadily advance its missile defense, counterstrike capabilities, and intelligence gathering systems, and ensure that our vital national interests, including the immediate resolution of the abduction issue, are fiercely protected in Alliance consultation. Ultimately, the modern competitive environment has taken on the structure of total warfare. National security can no longer be achieved in military domain. 

It is realized only through the strategic and integrated application of a diametric framework: diplomacy, information, military, economics, and technology. For decades, in the post-war era, Japan built its immense prosperity on a paradigm that separated economics from security. However, that foundational premise has evolved.

What is demanded of Japan today is a transformation into a strategic state, a nation that place economic security at the very core of its national strategy, maximizing its interest and regional stability through the dual engine of norm-setting and alliance implementation. Power without ideals cannot be sustained. However, we must also recognize that ideals without power will inevitably end in emptiness.

In this era of the realpolitik, it is practical intelligence and wisdom to breach these two, power and ideas, that will elevate Japan into a sustainable strategic state, and ensure a stable prosperous in the Pacific for all. Thank you for your attention.

Jason Hsu:

Thank you, Kitamura-san, for very insightful and very timely remarks. It’s a pleasure and a privilege to have you with us today. Let’s dive right in. On July 7, China launched from a submarine a ballistic missile, and that has caused wide anxiety across the region, including countries that was affected with missiles flew across its land. And Japan have also responded as well.

And China did not notify the regional countries ahead of its missile launch. And in fact, only a few hours ahead of the launch, China notified it. Can you share us with how Japan interpreted this action? And also, is that served as a warning to Japan, given that China, Beijing, also accused of Japan over-extending the militarism as well? How would you counter that, and also respond to that?

Shigeru Kitamura:

I think PRC is seeking for such kind of opportunity for a long time. Especially China is seeking for accomplishing the long-range ballistic missile, especially targeting against US mainland. This technological achievement is almost accomplished. It’s a rather big political impact, especially against the United States, I believe.

And Japan is always threatened by the ballistic missile threat from China. For example, during the visit of the speaker Pelosi in Taiwan, they retaliated by launching the ballistic missile. Several ballistic missile landed on the east of Japan. It’s a very big threat. And this time, unfortunately, such kind of thing doesn’t occur, but we are always thinking about such kind of the escalation and the threatening from PRC.

Jason Hsu:

Related to this, Chinese Coast Guard vessels now operate around the Senkaku Islands, as you noted during your speech, now with greater frequency, and as well as more heavily armed ships are spending longer periods inside Japan’s territorial waters. How do you assess Beijing’s strategy? Is China trying to gradually change the status quo? And how should Japan respond to gray zone coercion designed to stay below the threshold of armed conflict?

Shigeru Kitamura:

Actually the threatening by the Chinese Coast Guard against Senkaku is a everyday issue. Especially, they are enhancing the equipment from the viewpoint of the firepower and the vessel itself. The Chinese Coast Guard vessel is not from the civil one. It is the commission from the military vessel. I believe Japan must prepare such kind of escalation and change of the status quo through the enhancement of the capability of the Japanese Coast Guard. At the same time, revising the registration of the Japanese Coast Guard.

Jason Hsu:

Now, let’s move on to the Japan- Korea relationship. You’ve noted ties between Seoul and Tokyo have notably improved, and conditions are ripe for expanded cooperation. And you’ve also mentioned during our interview that North Korea has been focusing on nuclear issues, and has been putting efforts into building intense relations with Russia. 

In the future, economic security between Seoul and Tokyo will be a big part in bilateral cooperation. The two countries will be able to cooperate in many forms. Can you talk about sort of your future outlook of Tokyo and Seoul collaboration on these matters, also concerning North Korea and Russia ties, and China as well?

Shigeru Kitamura:

First of all, I’m so relieved. From time to time, the political change of the ROK gives impact over the bilateral relationship. Happily, the relation between Prime Minister Takaichi and President Lee Jae Myung is so good. And President Lee Jae Myung keep the pragmatic demands concerning the diplomacy with Japan. Especially, he underscore the relationship among the US, ROK, and Japan.

I hope this posture will be continued. At the same time, I believe the ties on the domain of the economic security must be enhanced. During the tenure of Moon Jae-in, he never used a word of the free and the open in the Pacific. Lee Jae Myung used these word. It’s a very good thing. At the same time, on the domain of the energy security and the supply chain, the ROK under Japan have lots of place in the sphere to cooperate with.

Jason Hsu:

Kitamura-san, you ranked Japan’s intelligence apparatus for eight years. This month, the organization you led becomes the new national intelligence agency, and Japan plans to create a delegated foreign intelligence service by 2027.

From your perspective, what intelligent threats from China concern you most today? And how will these reforms improve Japan’s ability to identify, understand, and counter Beijing’s espionage in influence operations and gray zone activities?

Shigeru Kitamura:

Most important threat from our adversaries, not only from the PRC, but also other countries. Maybe this information operation is so critical. This advanced impact operation on the domain intelligence is not done by the human power.

It’s very similar to the cyber attack in utilizing the AI technology. Japanese government must confront such kind of threat. In Japan, AI agent using attack must be countered by AI agent technology on the domain of the cybersecurity. Maybe in the domain of disinformation, we can say the same thing.

Jason Hsu:

Now let’s shift to the economic security that you’ve spent a lot of time thinking through, and also the integrated deterrence that you’ve talked about, converging the diplomacy, economic security, defense and technology. I think it’s one of the most critical issues that countries around the world are dealing with right now.

Now, you’ve shaped Japan’s economic security strategy, and that has increasingly becoming the big issues, especially concerning critical minerals, semiconductor, AI. And what does that tell us about how Japan’s now sees its role in the world between economic security and the national strategy? And should we expect the new national security strategy to integrate economic security even more explicitly?

Shigeru Kitamura:

First of all, the actual national security strategy prescribed in 2022, it’s mentioned about the enhancement of the economic security policy. It talked about the five pillars among the main policy concerning the national strategy. In these pillars, they talked about economic security policy. It’s so important. 

Beforehand, as you mentioned, Economic Security Promotion Act was regulated. Actually, the new National Security Strategy in Japan is deliberated among the advisory board. I believe the economic security policy has no end. And as you mentioned, the Economic Security Promotion Act is revised every five years, and this year it was revised also. 

Actually, the economic security policy is national security. Economic security is national security. Therefore, on the new National Security Strategy, this will be treated in the mainstream.

Jason Hsu:

And related to economic security and energy security is the recent development of US, Korea, and Japan sign a MOU on developing a small modular reactor, SMRs. Can you share us a bit about how Japan think about this technology and its potential role in the economic security, and supply chain and energy security as well?

Shigeru Kitamura:

I think on the joint statement, between US and Japan, that small modular reactors is mentioned every time. It’s a very good thing for the new shift of Japan’s nuclear policy. As you know, we experienced a tragic disaster in 11 March, the big earthquake— 

Jason Hsu:

Fukushima—

Shigeru Kitamura:

Fukushima, that’s right. But in considering the energy perspective, the renewal of the nuclear policy is indispensable. Prime Minister Kishida changed such kind of policy dramatically, but maybe small reactor issue is so important, especially concerning the data center and the energy consuming facility during the era of the AI. Such kind of energy policy shift is so important. And Japan will change gradually the energy policy toward nuclear power plant.

Jason Hsu:

You’ve also noted in your speech about Taiwan, and Taiwan’s recent dealing with the gray zone warfare, and the potential contingency in the Taiwan Strait would also impact Japan. And so, Prime Minister Abe famously said Taiwan’s contingency is a Japanese contingency. And under Prime Minister Takaichi, Japan has taken a more assertive stance towards the PRC as well. And deepened the relations with Taiwan to protect the first island chain.

How do you foresee Japan prepare for a Taiwan contingency? And in terms of alliance planning with the United States, along with defending the Southwest Islands and the prodigal cooperation with Taiwan, despite the absence of the formal ties?

Shigeru Kitamura:

First of all, I don’t think the remarks done by the Prime Minister Takaichi is more assertive than other prime ministers, I believe. Maybe she talked about this issue on the diet session. It’s provoked the rather serious consequence. 

However, Japan is always thinking about such kind of emergency, especially I talked about peace and security registration in 2015. Existential case, we must prepare for such kind of thing. And the Japan Self-Defense Force must respond in such kind of case, responding. 

I think, concerning the stability of the Taiwan Strait, two things is so important. One is enhancing the deterrent to power, not only of Japan, but also through the alliance process between the US-Japan. Taiwan is so near geographically to Japan. Such kind of emergency certainly give the impact to Japan.

Here’s the first thing, we must enhance the current power against our adversaries. Secondly, it’s so important to strengthen the ties with Taiwan. After the revision of the 5Gs Act in 2000 maybe 20 or so, at the same occasion of the enactment of the economic security promotion law, we introduced the TSMC in Kumamoto prefecture.

It’s a rather revolutionary change of the industrial policy of Japan. After the installment of the TSMC in Japan, I think the economic and the industrial tie between Japan and Taiwan is so strengthened. Such kind of industrial economic ties also enhance the current power against our adversaries.

Jason Hsu:

So, I can confidently say that Japan welcomes closer economic security ties with Taiwan, through technological development cooperation and digital trade and shielding their industries from the geopolitical coalition. So, as you have noted, TSMC has also announced expansion in their Japan operation, too. So, we very much welcome this type of development. 

Now, Kitamura-San, I’d like also you to comment on how you foresee as Japan move from a rather restrained weapon development country and now to be able to export weapons. And how does that change how Japan views its role in a regional security architecture? 

And could there be a more integrated way that Japan could become a potential development of components and co-production and co-development in the Indo-Pacific region, in terms of the defense articles?

Shigeru Kitamura:

I believe military equipment corporation is so important to enhance the security tie with foreign countries, especially allies under a friendly country. For example, we already tackle the GCAP project with United Kingdom and Italy for the future combat aircraft. 

I think such kind of military cooperation is so important to give the trust basis among relevant countries. At the same time, we are tackling the military equipment, used military equipment to the ASEAN countries, especially maritime security is so important. Among ASEAN countries, maritime security measures are so important.

In observing actual situation, especially coastal guard level, the Philippine and Vietnam are so vulnerable. And they are so, from time to time, in predicament on several incident I believe. Therefore, on this domain, Japan support strongly the enhancement of the coastal guard capability of ASEAN countries. Maybe actual ongoing project is we are exporting the used defense vessel of such kind of country. It’s same purpose, how we can enhance the maritime security capability to relevant countries.

Jason Hsu:

Obviously, we are seeing more and more gray zone intrusions, particularly in the region of South China Sea. And Philippine has becoming quite a forefront, bearing the contingency and potential gray zone operations. 

And that does impact Japan as well, because sometimes PLA does this type of operation in order to send a signal or sometimes a warning to countries, threatening them whether they take actions or not. So, my question to you is, how does Japan view its involvement potentially in the South China Sea. And potentially, could there be a way that Japan also develop more enhanced posture in the region, in terms of South China Sea as a potential threshold?

Shigeru Kitamura:

Coast guard in East China Sea, the confrontation between two coast guards is everyday issue. It’s a direct intervention by the Japanese government. It’s normal. It’s a territorial sea and a connecting sea. Cost Guard in South China Sea, as I mentioned, the Japanese government decide to enhance the relevant country’s capability. Of course, physical capability. 

Not only physical capability, but also human capability. As I mentioned, we exported our used coast guard vessel to our relevant countries. At the same time, the Japanese coast guards is tackling the capacity building to the relevant country’s coast guard.

Jason Hsu:

Now two decades ago, China was able to impose critical mineral choke point. And that has becoming a strong issue today. And as Japan look forward in developing more economic security resilience and through the collaboration with US, under Pax Silica, are you seeing particular areas Japan will focus on, in terms of not only deviating from those dependency from China, but also making sure that Japan still maintain its critical node in this supply chain?

Shigeru Kitamura:

It’s a very critical issue. We have experienced so-called first economic coercion from China 2010, after the collision between the Chinese officially vessel and the Japanese coast guard. And we tried to multiply the supply chain areas. 

On that moment, the PRC decided to ban the areas against Japan. Therefore, afterward, we tried to multiply the supply chain. But up to now, it’s not enough. Actually, the US, Australia, Japan concluded the partnership concerning the supply of the areas. Maybe such kind of trial is so important. At the same time, the technological innovation is also needed to decrease the impact of such kind of economic coercion from China.

Jason Hsu:

You served under Prime Minister Abe, who many see as the father of the concept of Indo-Pacific and a champion of the Quad, and a free and open Indo-Pacific initiative. How do you evaluate the Amended Economic Security Promotion Act, which the Japanese diet passed last year in the context of Japan’s expanded role in the Indo-Pacific Economic Security? 

What concrete alliance could be formed, as you have noted in your speech that the regional framework could be established with Japan taking a more enhanced role in deliberating this architecture? So, we’d love to know your thoughts. If you were to be the designer of a new economic security enhancement project in the Indo-Pacific region, what would you like to see happening?

Shigeru Kitamura:

First of all, the revision of the Economic Security Promotion Act was passed last month. In this revision, we introduce the enlargement of the mission of the JPIC or the finance tower of the foreign countries. Maybe this enlargement of the role of the JPIC is support Japanese enterprises to do the economic cooperation with relevant countries. 

Actually, the project is not decided, but the main target is global south countries. For example, on the domain of the energy, on the domain of the layers, I believe. But it’s announcing maybe this division is targeting for the Japanese enterprise and Japan itself. But I talked about the role of the CPTPP and role of the Japan-Europe EPA.

We talked about normal establishing role. Actually, you mentioned about free and open in the Pacific. It’s a rather open structure. Quad is a little bit different. Prime Minister Shinzo Abe thinking about open system, which guarantee the talent power and the security and the safety in this region through the norm and through the so-called partnership and alliance.

I talked about the importance of the CPTPP and the Japan-EU EPA and the Quad and maybe OCUS also. Such multi-layered corporate military and industrial economic cooperation is so important.

But at the same time, maybe we are thinking about the new structure for the collective economic security regime, in the regime which was accomplished and made by the countries who had the capability and who had the willingness to do that. Concerning the exportation control regime, vascular arrangement doesn’t work very well. 

Therefore, actually, for example, on the domain of the semiconductor manufacturing machine, US, Japan and the Netherlands work closely. Therefore, I talked about some kind of the free sphere of the trade partnership. At the same time, concerning the domain of the economic security, we can introduce such kind of minilateralism-oriented, the new collective economic security regime.

Jason Hsu:

Yeah. Related to this, particularly on the export control to the semiconductor equipment and the chips manufacturing, how does Japan ensure that Japanese business interest is protected while also imposing enough of export control on China’s potential threats into this sector, particularly when in entire equipment supply chain we understand China is also a big market to some of these Japanese companies. 

How does Japanese government being able to convey a message that national security is becoming a centerpiece in the semiconductor and equipment sector and that would also deliver not to harm Japanese business interest as well?

Shigeru Kitamura:

I think the liberty sphere of the trade must be guaranteed. Export control and internal investment control is some kind of exception. But in reality, it’s so important to protect our own advanced technology. This year also the Foreign Exchange and the Foreign Trade Act was revised, which create the Japanese CFIUS regime. And at the same time, it enhanced the governmental power to detect the flow of the capital, especially the capitalist stemming from outside.

Maybe Japanese government can intervene such kind of the foreign capitals also. It’s some kind of the advancement of the export control and the internal investment control by the Japanese government. At the same time, we introduce also the retrospective intervention by the government concerning the specific transaction between private sectors.

Jason Hsu:

One last question from me, and then we have a few minutes left for the audience to ask questions. On the topic of energy, we’ve seen the close of Strait of Hormuz had really created a energy choke point. And looking at the Taiwan Strait, we understand if there were to be a blockade situation, or even the quarantine inspection, the energy shipments would be greatly impacted and the global market impact will be huge. 

And a few months ago, Taiwan has actively engaged discussion with state of Alaska to potentially procure LNGs from Alaska as a potential alternative to divest from Middle East dependency. Wanted to ask Japan’s attitude as potentially joining this energy security program to develop a potential Alaska pipeline through Japan and providing an alternative strategic energy reserve.

Shigeru Kitamura:

Concerning LNG, after the crisis of 2011, the Japanese government decide to multiply the supply chain. Up to that moment, the Japan is totally dependent on the Gulf country concerning the importation, the LNG. But actually the supply chain is so multiplied. 

It’s one advancement based on our experience. Concerning crude oil, the situation is a little bit different, actually more than 95 percent from the Gulf countries. Happy, after the crisis in the Middle East, Japan introduce the institutional solution for the stockpiling of crude oil. Happy, the price of the gasoline and the petroleum products are not so high, of course, because of the intervention of the government.

But concerning the energy of the Alaska, it’s a very important project I believe. I totally support such kind of project and I have the occasion to talk about this issue with the trade company of Japan. Always they are thinking about the profitability and the cost of this exploitation of Alaska.

Even now it’s some challenges for this exploitation. But regarding the supply of the energy in the Pacific Ocean region, there are so few energy station in the Pacific Ocean, not only our side, but also the United States. 

Therefore, I hope the project must be supported not only by Taiwan, but also by Japan. Happy, the Prime Minister Takaichi mentioned about the commitment of the Japan to the exploitation of Alaska. It’s a very good thing.

Jason Hsu:

Great. Great. Okay. Now we have a few minutes. This gentleman right here in the middle.

Audience Member Demetri Sevastopulo:

Thank you. Kitamura-san, my name is Demetri. I’m the US-China correspondent at the Financial Times. I want to ask you about the Japanese announcement recently that the government would bring in a secure and sovereign cloud system. And I have two questions. 

One is, what will that allow you to do with the Americans in the Alliance that you cannot do right now? And separately, do you think Japanese companies will have a role in the solution, or will it just be a US hyperscale company?

Shigeru Kitamura:

It’s a very good question. I know very well the opinion of the hyperscale companies. And first of all, I’m realist on this issue. The Japanese government decide to introduce government cloud. Five company participate in the government cloud of Japan. Four out of five are American hyperscalers. One is a Japanese company. 

We must confront and we must face with such kind of reality. It’s the first thing. I don’t have the concrete image of the AI and the sovereign of the cloud, I think. But in any way, it’s so important to secrecy and the confidentiality must be maintained by the Japanese technology itself.

But on the other hand, concerning the sovereignty of AI, we talked about the investment amount compared with US, China, EU. Japan’s investment amount is one by 100 compared with the United States. Compared with the European Union, one part tenth. And compared with China, one part tenth also. 

That’s the situation. And we must think about the distance of the advancement technology between two sides. Maybe concerning the sovereign, the cloud considered by the Japanese government must always think about the reality, actual reality.

Jason Hsu:

Thank you. This gentleman here and then here.

Audience Member:

Sorry. Hi, I have a follow-up on the Taiwan contingency. I just wanted to know that in what ways do you think that a Chinese gray zone activity can escalate into a naval blockade of Taiwan? And if that actually happens, how should Japan respond to that? Thank you.

Shigeru Kitamura:

As I mentioned, Japan must respond. If this case goes with a condition of the Japanese registration, the Japan self-defense force react is certainly. Concerning a blockade, maybe we must talk about such kind of situation. What kind of situation is it? What I can say is if this case going with the condition prescribed by our reservation, our government will intervene and react. That’s all.

Jason Hsu:

This one right here and maybe that one for the one last question. Yeah. This one and that one. Yeah.

Audience Member:

Thank you very much for being here, sir, both of you. I have a question. We’ve seen that Japan has invested in its cruise missile capability. With the effectiveness of cheaper munitions demonstrated by both Iran and Ukraine, and you mentioned also the necessity of a counterstrike capability. Is Japan considering using or manufacturing these type of cheaper drone-based munitions? Is Japan considering manufacturing this type of cheaper drone-based munitions as part of a counterstrike capability?

Shigeru Kitamura:

Concerning the counterstrike capability, maybe up to now, Japan is not thinking about drone strike. Of course, drone is so indispensable for the modern warfare. The Japan Ministry of the Defense is thinking about the new type of warfare, how they can introduce the drone technology and the drone itself.

Jason Hsu:

In the back.

Audience member Masaki Sakamoto:

Thank you so much. Masaki Sakamoto from Marubeni Corporation. My question is on the specialized investment fund you announced to launch just last month. I saw this article that it says it’s generally focusing on the international security issues, but could you give some details on that the concept of that fund you launched about the concept or strategy, or if there’s any specific industry or fears of the investment industry?

Shigeru Kitamura:

Our fund?

Audience member Masaki Sakamoto:

Yeah.

Shigeru Kitamura:

Okay. Thank you very much. After all, I’m tackling the establishment of the new fund, especially focusing the economic security. I ran my company almost for five years, and I gave consulting and advice to the enterprises of Japan. In Japan, maybe 10 billion yen or so, is the totality of the asset of the company. It’s a rather small and middle-sized company in Japan possessing the advanced technology. They are rather numerous. 

From time to time, there are lots of predicament to face with margin acquisition from the foreign capitals. Of course, as I mentioned, the foreign exchange and the Foreign Trade Act of Japan can intervene in the certain margin acquisition by the foreign capitals, but their intervention is so rare, maybe twice during these 20 years. 

Concerning the margin acquisition, I believe it must be resolved through the private sectors. Therefore, it’s so important to the Japanese capital itself to have the purpose to secure the such kind of small and middle-sized enterprise possessing the advanced technology. It’s a motivation, and we are tackling establishing such kind of capitals. Therefore, our targeting enterprise is a Japanese enterprise, and we are asking for the LP from the like-minded country and the allies capitals also.

Jason Hsu:

Well, Kitamura-san, thank you very much for your precious time and also making Hudson a visit, and we welcome you back anytime. So join me in thanking Kitamura-san. Again, thank you very much.

Shigeru Kitamura:

Thank you very much.