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Japan Implements Law to Protect Domestic Tech Supply from China

Japan Implements Law to Protect Domestic Tech Supply from China

A new Japanese economic security law came into effect on Monday, Kyodo News reported, noting that it aims to bolster a stable global supply of crucial technologies such as semiconductors and protect their patents in the face of increasing Chinese interest in such materials. Japan’s parliament passed the economic security bill into law on May 11 with the goal of enforcing it in stages over the next two years.

The legislation “establishes a system of secret patents kept in Japan to ensure technological breakthroughs are not used by other countries to develop nuclear weapons or other military equipment,” Reuters reported of the law at the time, noting that it was “primarily aimed at China.” New aspects of the law went into effect on August 1. Kyodo News reported the development, writing, “The latest part consists of two pillars — reinforcing supply chains to stably procure vital products and facilitating the development of artificial intelligence and other cutting-edge technologies through public-private-sector cooperation.” The Tokyo-based news agency noted that “two other pillars” of the law are scheduled to go into effect gradually starting in 2023.

These pending precepts concern “infrastructure screening by the government in such sectors as telecommunication and transportation to mitigate vulnerability to cyberattacks and other threats, as well as withholding certain patents related to sensitive technologies from public view.” Japan’s economic security law “stipulates imprisonment of up to two years or a maximum fine of 1 million yen ($7,670) for those who leak undisclosed patent information,” Kyodo News observed in May. Tokyo’s effort to protect its crucial technology industries from outside observers comes amid rising interest in such sectors by China. Beijing has ramped up its participation in the global competition for advanced technology development in recent years while maintaining a notorious reputation for allegedly stealing the sensitive information needed to produce such products from other nations. Bloomberg observed the following in June concerning Beijing’s alleged support of intellectual property theft by Chinese national engineers: China lags in semiconductor manufacturing, leaving its most important industries dependent on technology dominated by foreign companies. Making its own advanced chips is a priority that’s complicated by US sanctions that limit access to the latest equipment. Beijing has taken unprecedented steps to clear such hurdles, including launching a $150 billion semiconductor initiative in 2014 to turbocharge domestic production. China has also encouraged people to steal technology that advances Beijing’s interests, according to the FBI [U.S. Federal Bureau of Investigation]. “China recognizes it needs to make leaps in cutting-edge technologies,” FBI Director Christopher Wray said. “Instead of engaging in the hard slog of innovation, China often steals American intellectual property and then uses it to compete against the very American companies it victimized.” Bloomberg referred to the U.S. government’s decision to impose sanctions on the Chinese technology company Huawei in August 2020.

The sanctions prohibited any foreign semiconductor company from selling microchips developed or produced using U.S.-patented software or technology to Huawei unless it obtained a special license granting permission for such a transaction.

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