The EU Japan Centre is releasing a weekly press review covering Japan's economic and business matters.
▶ Japan eyes European defense development tie-up under EU initiative
30 Dec, 2025
Photo Source: Reuters
Japan plans to join a European Union program to boost joint development and production of drones and antimissile systems, allowing Japanese companies to access EU markets and benefit from EU funding. Under the EU’s SAFE framework, Japanese components could make up over 35% of the cost of jointly developed products once a final agreement is reached. Full participation would require funding contributions, compliance with NATO standards, and would let Japanese firms incorporate advanced European technology while strengthening market access.
Nikkei Asia: https://asia.nikkei.com/politics/defense/japan-eyes-european-defense-development-tie-up-under-eu-initiative
▶ Japan to subsidize more industry-academia collaboration at universities
03 Jan, 2026
Photo Source: University of Tokyo
Japan plans to subsidize university departments and research institutes funded by companies to promote industry-academia collaboration and develop highly skilled workers. Universities and companies will jointly design curricula and research programs, with funding from government subsidies and corporate contributions—up to 1 billion yen ($6.4 million) per project. The program, targeting fields aligned with local industries (e.g., semiconductors in Hokkaido and Kyushu), will start as early as fiscal 2027. Students gain practical skills and employment opportunities, while companies benefit from internships, scholarships, and talent pipelines. The initiative is inspired by Taiwan and South Korea, where universities and companies collaborate closely in semiconductors, automobiles, and other advanced fields.
Nikkei Asia: https://asia.nikkei.com/economy/japan-to-subsidize-more-industry-academia-collaboration-at-universities
▶ Japan to support development of AI robots for shipbuilding
03 Jan, 2026
Photo Source: Imabari Shipbuilding
Japan will start funding the development of AI-powered robots for the domestic shipbuilding industry to address labor shortages. The robots will learn tasks such as bending, welding, painting, cleaning, and inspections from skilled workers and operate autonomously. The initiative, part of a 350 billion yen plan to revive shipbuilding, aims to have the robots operational within about a year, supporting the country’s economic and maritime security.
Nikkei Asia: https://asia.nikkei.com/business/transportation/japan-to-support-development-of-ai-robots-for-shipbuilding
▶ Japan using Saudi-made coral skeletons from expo for sea conservation
04 Jan, 2026
Photo Source: Kyodo
Japanese universities are using 3-D printed artificial coral structures donated by Saudi Arabia after the Osaka World Expo to help restore damaged coral reefs. Made of calcium carbonate, the structures are designed to encourage coral growth more effectively than concrete or metal.
The University of the Ryukyus and Kansai University are testing the corals in Okinawa and Kagoshima waters to study their impact on marine ecosystems and coral regeneration. While full restoration is challenging, researchers hope the project supports biodiversity and raises awareness, with results to be shared at the Riyadh Expo in 2030.
Kyodo: https://english.kyodonews.net/articles/-/67905
▶ Japan to Draw up Action Plan to Reduce Clothing Waste
05 Jan, 2026
Japan’s Environment Ministry plans to compile an action plan by March to reduce household clothing waste, aiming for a 25% reduction by fiscal 2030 compared with 2020 levels. The plan will outline measures for consumers, local governments, and businesses to promote reuse, recycling, and more appropriate production and consumption of clothing. With most discarded clothes currently incinerated or landfilled and reuse rates low, the ministry hopes to strengthen efforts to build recycling systems, encourage recyclable design, and reduce the environmental impact of clothing production and disposal.
Yomiuri: https://japannews.yomiuri.co.jp/politics/politics-government/20260105-302298/
▶ China bans exports of dual-use items for military purposes to Japan
06 Jan, 2026
Photo Source: Nikkei
China has banned exports to Japan of dual-use items that could support military purposes, citing concerns over Japan’s recent statements on Taiwan. The move follows remarks by Japan’s prime minister suggesting a Chinese attack on Taiwan could threaten Japan’s survival, which Beijing condemned as provocative. The ban covers goods, software, and technologies with both civilian and military applications, including some rare earth elements. While political tensions and defense spending in Japan are rising, there has so far been no actual decline in China’s rare earth exports to Japan, according to the latest available customs data.
▶ Japan Domestic Drone Production Financial Assistance Targeted by Government in Promotion of National Security
07 Jan, 2026
Photo Source: Yomiuri
Japan’s government will support domestic drone production after designating unmanned aerial vehicles as strategically important products for economic security. To reduce reliance on imports—mainly from China—the government will subsidize up to 50% of R&D and capital investment costs and aims to build capacity to produce 80,000 drones annually by 2030. Support will focus on civilian uses such as disaster response, infrastructure inspection, and agriculture, while also strengthening supply chains for key components like motors and batteries.
Yomiuri: https://japannews.yomiuri.co.jp/politics/politics-government/20260107-302690/
▶ Japanese business leaders positive about continuing wage hikes
07 Jan, 2026
Photo Source: JIJI
Japanese business leaders expressed strong support for continued wage increases ahead of this year’s shuntō spring labor negotiations, aiming to match or exceed last year’s 5.39% average raise at major companies. Executives emphasized higher pay as essential for securing talent, including foreign workers, and sustaining economic growth. A key challenge is spreading wage gains to small and midsize companies, which leaders said are vital to Japan’s economy. Business groups called for defeating inflation and improving productivity—particularly through the use of AI and robotics—to support sustainable wage growth and investment.
Japan times: https://www.japantimes.co.jp/business/2026/01/07/companies/business-leaders-positive-wage-hikes/
▶ China Curbs Rare Earth Exports to Japanese Companies after Dual-Use Ban, WSJ Reports
09 Jan, 2026
Photo Source: Reuters
China has begun restricting exports of rare earths and rare-earth magnets to Japanese companies, according to the Wall Street Journal, following a broader ban on exporting dual-use goods with potential military applications to Japan. While China’s commerce ministry says the ban targets only Japanese military firms and will not affect civilian users, reports indicate export license reviews have been halted across Japanese industries. The move comes amid worsening China-Japan relations and could impact sectors such as automotive manufacturing that rely on rare-earth components.
Yomiuri: https://japannews.yomiuri.co.jp/world/asia-pacific/20260109-303054/
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▶ Completion of Additional $22.5 Billion Investment in OpenAI
31 Dec, 2025
SoftBank Group has completed its full $40 billion commitment to invest in OpenAI, finalizing an additional $22.5 billion investment on December 26, 2025, through SoftBank Vision Fund 2. With third-party co-investors contributing an extra $11 billion, the total funding reached $41 billion. SoftBank now owns approximately 11% of OpenAI. Both SoftBank and OpenAI leaders emphasized their shared vision of advancing AI to benefit humanity.
Softbank: https://group.softbank/en/news/press/20251231
▶ Startup, retailer seal first fusion power purchase deal in Japan
01 Jan, 2026
Photo Source: Helical Fusion Co.
A Japanese fusion startup, Helical Fusion, and supermarket operator Aoki Super have signed what they call Japan’s first agreement to buy and sell electricity from nuclear fusion, even though commercial fusion power has not yet been achieved.
The deal reflects growing interest in carbon-free energy as Helical Fusion targets generating fusion power by the mid-2030s. Aoki Super, which has invested in the startup, hopes demand from consumers will help speed commercialization. The agreement highlights rising competition and government support for fusion as a future clean energy source.
Asahi: https://www.asahi.com/ajw/articles/16211914
▶ Daiichi Sankyo to spend $1.9bn on production lines in China, US, elsewhere
03 Jan, 2026
Photo Source: Daiichi Sankyo
Japanese drugmaker Daiichi Sankyo will invest roughly 300 billion yen ($1.9 billion) to build production facilities for its targeted cancer drugs (ADCs) in Japan, the U.S., Germany, and China to reduce geopolitical risks such as tariffs. The company plans to commercialize five ADCs by 2030, with Enhertu already generating strong sales and projected to reach 808.3 billion yen in FY2025. The new facilities will consolidate ADC production processes and expand global supply capacity to over 50 million vials annually, while Daiichi Sankyo works with contract manufacturers to strengthen the supply chain. The global ADC market is expected to triple to $30 billion by 2028, with Daiichi Sankyo projected to hold the largest share. The company is also building a new R&D facility in Tokyo to develop next-generation drugs beyond current ADC technology.
▶Japan's TEPCO to spend $70bn over 10 years to meet power need
05 Jan, 2026
Photo Source: Tomoki Mera/Nikkei
Tokyo Electric Power (TEPCO) plans to invest over 11 trillion yen ($70 billion) in the next decade to increase carbon-free electricity generation to more than 60% by 2040, up from around 20% in 2024. Investments will cover nuclear power, renewable energy, and grid expansion, including offshore wind, geothermal, hydroelectric projects, and safety upgrades at the Kashiwazaki-Kariwa nuclear plant. TEPCO faces funding challenges due to past losses and Fukushima-related costs and plans to seek capital from domestic and overseas investors. The expanded capacity is expected to support growing electricity demand from data centers in the Tokyo metropolitan area.
Nikkei Asia: https://asia.nikkei.com/business/energy/japan-s-tepco-to-spend-70bn-over-10-years-to-meet-power-need
▶ NEC says its new verification tech can ID walking, blurry subjects
06 Jan, 2026
Photo Source: NEC
NEC has developed the world’s first combined facial and iris recognition system that can accurately identify people as they walk past a single camera without stopping.
Designed for uses such as immigration control, airport boarding, and payments, the system improves efficiency by eliminating the need for ID cards or passwords. Using advanced AI, it can identify people moving at normal walking speeds, even if they are wearing glasses or looking away. NEC plans to begin pilot tests by fiscal 2026 and commercialize the technology in fiscal 2027.
Asahi: https://www.asahi.com/ajw/articles/16217526
▶ Contract Signed to Build World’s Largest 40,000 m3 Liquefied Hydrogen Carrier
06 Jan, 2026
Image: Kawasaki Heavy Industries
Kawasaki Heavy Industries and Japan Suiso Energy have signed a contract to build the world’s largest liquefied hydrogen carrier, with a capacity of 40,000 m³, at Kawasaki’s Sakaide Works. The vessel will support JSE’s NEDO Green Innovation Fund Project to demonstrate ship-to-base hydrogen transport and ocean-going trials by FY2030. Building on Kawasaki’s previous experience with the 1,250 m³ SUISO FRONTIER, the new ship features advanced insulation, dual-fuel propulsion using hydrogen and oil, efficient cargo handling, and rigorous safety measures. By enabling large-scale, low-emission hydrogen transport, the project aims to establish a global hydrogen supply chain and support a hydrogen-based, carbon-neutral society by 2050.
Kawasaki Heavy Industries: https://global.kawasaki.com/news_260106-1e.pdf
▶ Toyota doubles down on internal combustion engines despite China EV shift
07 Jun, 2026
Image: Nikkei
Toyota is maintaining its engine technology while adapting to global electrification by pursuing a multi-path strategy. Despite rapid EV adoption in China, the company believes engines still play a role, especially when combined with hybrid and environmental technologies, as seen in the upcoming GR GT hybrid sports car with a V8 engine. Toyota aims to preserve its engineering identity and avoid commoditization in an EV-dominated future. The strategy reflects differing regional trends: strong hybrid demand in the U.S., where Toyota is expanding local hybrid production, versus China’s fast EV shift, where Toyota is developing China-specific EVs with local partners. While this diversified approach is costly and risky, Toyota is balancing in-house development with selective partnerships to stay competitive across global markets.
▶ Digital Red Queen: Adversarial Program Evolution in Core War with LLMs
08 Jan, 2026
Image: "Now, here, you see, it takes all the running you can do, to keep in the same place." — Lewis Carroll[
The Digital Red Queen (DRQ) approach demonstrates how AI-driven self-play in competitive environments can uncover robust, adaptive strategies. Beyond Core War, this methodology holds promise for studying and guiding evolutionary dynamics in areas such as artificial life, biology, drug discovery, cybersecurity, financial markets, and other multi-agent systems. Insights from DRQ could help anticipate and manage complex adversarial interactions, ultimately informing safer and more effective real-world AI deployment and advancing our understanding of evolutionary arms races.
sakana.ai: https://sakana.ai/drq/
▶ Japan automakers smash 30-year reverse import record
09 Jan, 2026
Photo Source: Ryosuke Hanada/Nikkei
Japan’s imports of vehicles produced overseas by domestic automakers rose 19% last year to a record 111,513 units, the highest level in 30 years. Suzuki led the increase by importing more vehicles from India, benefiting from lower production costs. While Honda’s, Nissan’s, and Toyota’s reverse imports declined, Honda plans to import a new EV from India, and Toyota will begin importing U.S.-made models. Japan is also easing vehicle certification rules to encourage more imports, particularly from the U.S.
Nikkei Asia: https://asia.nikkei.com/business/automobiles/japan-automakers-smash-30-year-reverse-import-record
▶ IHI Succeeds in Synthesizing SAF from CO₂
09 Jan, 2026
Photo Source: IHI
-Fig 1 Liquid hydrocarbon synthesized from CO 2 and hydrogen (Left), Upgraded jet fuel-range sample (Right)-
IHI, in collaboration with A*STAR’s ISCE² since 2022, has developed a technology that directly synthesizes SAF precursor hydrocarbons from CO₂ and hydrogen, demonstrating world-class catalytic performance. In 2025, IHI successfully produced liquid hydrocarbons in a test unit and upgraded them to jet fuel–range products. Testing by Washington State University confirmed excellent fuel properties that meet or exceed early SAF criteria, marking a key step toward ASTM qualification. This progress supports global efforts, including ICAO’s net-zero aviation goal by 2050, and advances IHI’s aim to enable economically viable, carbon-neutral aviation fuels.
IHI: https://www.ihi.co.jp/en/all_news/2025/technology/1201797_13745.html
▶ Tokyo Electron gears up for AI-driven 'supercycle' in memory demand
09 Jan, 2026
Photo Source: Tokyo Electron
Tokyo Electron is positioned to benefit from a surge in memory chip demand driven by the rapid expansion of AI data centers. Rising memory prices and growing use of high-bandwidth memory (HBM) in AI semiconductors are prompting memory makers to increase capital investment, boosting demand for Tokyo Electron’s chipmaking equipment, especially etching tools. The company is investing record amounts in R&D and capital spending to capitalize on a potential long-term industry “supercycle.” While it trails U.S. rival Lam Research in market share and valuation, analysts say even small gains in etching equipment share could significantly improve Tokyo Electron’s earnings and stock valuation.
Published: January 2026
The EU-Japan Centre currently produces 5 newsletters :
Joint venture established in 1987 by the European Commission (DG GROW) and the Japanese Government (METI) for promoting all forms of industrial, trade and investment cooperation between the EU and Japan.
