JAPANESE ECONOMIC AND BUSINESS WEEKLY NEWSLETTER: 11 July - 16 July,2026
The EU Japan Centre is releasing a weekly press review covering Japan's economic and business matters.
Weekly Japanese Economic and Business News (11 July - 16 July, 2026)
Outline
1. Economic News
▶ Japan to expand research grants, seeking 20,000 Ph.Ds a year
11 July, 2026
Photo Source:Kyodo
Japan plans to increase research fellowship funding and produce 20,000 Ph.D. holders annually by fiscal 2030. The government will raise financial support for doctoral students, double research grant funding, and send 30,000 young researchers overseas to strengthen science and technology. The initiative aims to improve Japan’s competitiveness in AI, quantum technology, and advanced research amid global competition with the U.S., China, and Europe.
Nikkei Asia:https://asia.nikkei.com/economy/japan-to-expand-research-grants-seeking-20-000-ph.ds-a-year
▶ Japanese government to work with industry and academia on dual-use tech3
11 July, 2026
Photo Source: JIJI
Japan will promote stronger collaboration among the government, academia, and industry on research and development of dual-use technologies. The government’s new innovation strategy aims to strengthen links between science, technology, and national security by establishing secure research bases outside universities by fiscal 2030. These efforts are intended to enhance technological innovation, business competitiveness, and defense-related research capabilities while preventing leaks of sensitive information.
Japan times:https://www.japantimes.co.jp/news/2026/07/11/japan/japan-industry-academia-dual-use-tech/
▶ Japan, U.S., Europe Institutions to Collaborate on Physical AI Research as Japan Eyes Domestic Model
14 July, 2026
Photo Source: Reuters
Japan, the U.S., and European research institutions will collaborate on developing “physical AI,” which enables robots, vehicles, and factories to perform complex tasks in the real world. Led by Japan’s National Institute of Advanced Industrial Science and Technology (AIST), the project brings together more than 200 researchers from leading universities and AI institutes. A Japanese company, Noetra, will work on commercializing the technology, with the goal of strengthening Japan’s industrial competitiveness in next-generation AI.
Yomiuri: https://japannews.yomiuri.co.jp/business/economy/20260714-338179/
▶ Japan hastily redraws AI strategy amid security fears
14 July, 2026
Photo Source: Nami Sugiura/Asahi
Japan revised its national AI strategy on July 14 to strengthen “AI sovereignty” and address growing cybersecurity and technological risks. The new policy focuses on improving domestic AI capabilities, reviewing regulations, increasing international cooperation, and promoting AI adoption through the AI Transformation (AX) initiative. Japan plans major investments in vertical AI and physical AI by 2040, but its current AI investment remains far below that of leading countries, especially the United States.
Asahi: https://www.asahi.com/ajw/articles/16724916
▶ Japan policy blueprint to build case for defense spending hike
15 July, 2026
Photo Source: Asahi
Japan’s government is expected to use its annual economic and fiscal policy guidelines to support a future increase in defense spending by highlighting higher defense spending targets adopted by allies such as NATO members, South Korea, and Australia. While the policy will not set a new numerical target, it will emphasize the need to strengthen Japan’s defense capabilities, laying the groundwork for a larger defense budget in the revision of Japan’s national security strategy later this year.
Asahi: https://www.asahi.com/ajw/articles/16728864
▶ Japan drone stocks soar as investors look beyond AI, traditional defense
16 July, 2026
Illustration by Nikkei
Investor interest is shifting toward Japanese drone companies as demand for unmanned military systems grows. Companies such as Terra Drone and Oki Electric are attracting attention because they are seen as relatively undervalued compared with overseas defense firms. Rising defense spending, expanded arms export policies, and the increasing role of drones in modern warfare are expected to support further growth in Japan's drone sector.
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2. Business News
▶ Japan successfully launches and lands reusable rocket
11 July, 2026
Photo Source: AFLO
Japan has successfully tested a reusable rocket, marking progress toward reducing launch costs and improving competitiveness in the space industry. Reusable rocket technology, similar to approaches used by leading global space companies, could help Japan expand commercial space activities, including satellite launches and future space services.
Japan times: https://www.japantimes.co.jp/news/2026/07/11/japan/science-health/japan-launches-lands-reusable-rocket/
▶ Japan startup SkyDrive showcases high-speed "flying car" demo in Yamaguchi
13 July, 2026
Photo Source: Kyodo
Japanese startup SkyDrive conducted a high-speed demonstration flight of its electric “flying car” in Yamaguchi Prefecture. The aircraft carried out a simulated sightseeing flight over the Seto Inland Sea, reaching speeds of 86 km/h. SkyDrive aims to commercialize the technology around 2028, with potential applications in tourism and urban transportation by reducing traffic congestion and easing pressure on existing transport systems.
Kyodo: https://english.kyodonews.net/articles/-/79811
▶ JR East to operate Japan's 1st hydrogen hybrid train at end of FY 2027
15 July, 2026
Photo Source: Kyodo
JR East will introduce Japan’s first hydrogen hybrid train on selected railway lines by the end of fiscal 2027. The train uses hydrogen fuel cells and batteries to generate electricity without CO2 emissions and can travel about 70 kilometers on one hydrogen refill. The project is part of JR East’s efforts to expand renewable energy use and reduce carbon emissions in its railway operations.
Kyodo: https://english.kyodonews.net/articles/-/79930
▶ IHI Power Systems and IHI Corporation Commence Demonstration of Ammonia-Fueled Reciprocating Engine for Land-Based Power Generation
15 July, 2026
Photo Source: IHI
IHI Group has started demonstration operations of a 6,000 kW-class ammonia-fueled power generation system in Gunma, Japan. The engine is designed to achieve more than 90% ammonia fuel use and greenhouse gas emission reductions. IHI aims to commercialize the technology by fiscal 2027 and expand its use in industrial facilities, data centers, remote areas, and other applications. The project supports Japan’s efforts to develop a low-carbon energy supply chain and achieve carbon neutrality.
IHI: https://www.ihi.co.jp/en/all_news/2026/resources_energy_environment/1202137_13814.html
▶ Japan power companies to build or bolster 30 substations to meet AI demand
16 July, 2026
Photo Source: Kansai Transmission and Distribution
Japan’s major power companies are investing in new and expanded substations to support rising electricity demand from AI data centers and semiconductor plants. Around 30 substations nationwide are planned, with significant increases in transmission capacity expected by the early 2030s. The upgrades aim to reduce delays in connecting data centers to the power grid and encourage AI-related investment beyond major cities. However, the large infrastructure costs are expected to eventually affect electricity prices for consumers.
Published: July 2026
EU-Japan Centre for Industrial Cooperation
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