The EU Japan Centre is releasing a weekly press review covering Japan's economic and policy matters.

 

Economic News

 

China rare-earth controls loom over Japan, US car production

14 June, 202

China’s recent export restrictions on rare-earth metals, including dysprosium and terbium, are causing disruptions in the global auto industry. Suzuki and Ford have halted production due to parts shortages linked to limited rare-earth supplies. These metals are crucial for neodymium magnets used in EV and hybrid motors. While Japanese suppliers currently have sufficient inventory, reliance on cheaper Chinese magnets—30% less expensive and making up 80% of global supply—has made manufacturers vulnerable. Japan is working to diversify its rare-earth sources through partnerships with Australia and France, aiming to reduce dependence on China by 2030. However, past and current disruptions highlight ongoing supply chain risks.

Nikkei Asia: https://asia.nikkei.com/Business/Automobiles/China-rare-earth-controls-loom-over-Japan-US-car-production

 

Japan and EU plan major upgrade to defense-sector cooperation

16 June, 2025

Japan and the European Union are set to begin talks on defense industry cooperation, with their first meeting scheduled alongside the Paris Air Show. Government officials and major defense companies from both sides will discuss building joint supply chains and boosting industrial collaboration. Shared goals include reducing reliance on the U.S., enhancing production capacity, and promoting innovation through partnerships with startups. The EU sees Japan as a key democratic partner amid growing security concerns, particularly from Russia. A new framework for regular dialogue and potential joint projects is in the works, with further cooperation expected to be confirmed at the upcoming EU-Japan summit in July.

Nikkei Asia: https://asia.nikkei.com/Business/Aerospace-Defense-Industries/Japan-and-EU-plan-major-upgrade-to-defense-sector-cooperation

 

Japan pushes preemptive cyber defense, calls on firms to act

16 June, 2025

With a national election approaching, Japan’s minority government passed new cyber defense legislation in May 2025 to shift from reactive to preemptive cybersecurity. The law allows the government to monitor online communications, shut down harmful servers, and requires companies to report attacks. As most critical infrastructure is privately run, cooperation with the private sector is vital. Japan faces cyber threats mainly from China, North Korea, Russia, and criminal groups. Companies like NEC are developing AI-based defenses and joining international alliances to strengthen security. The government aims to double cybersecurity professionals by 2030 and promote better domestic and U.S. industry collaboration to enhance protection of key systems.

Kyodo: https://english.kyodonews.net/news/2025/06/2f2260cb6665-focus-japan-pushes-preemptive-cyber-defense-calls-on-firms-to-act.html#google_vignette

 

Japan and UK to sign memorandum for nuclear fusion collaboration

16 June, 2025

Japan and the U.K. will collaborate on nuclear fusion development, combining the U.K.'s advanced robotic technology with Japan's manufacturing expertise, aiming for a demonstration reactor in the 2030s. Officials from both governments will sign a memorandum of cooperation covering R&D, facility sharing, workforce development, and safety regulations. This partnership aligns with Japan's updated fusion strategy and the U.K.’s £2.5 billion investment in fusion energy. It marks a shift from Japan’s previous focus on the delayed ITER project in France, expanding international cooperation amid growing global competition from the U.S., China, and the EU.

Nikkei Asia: https://asia.nikkei.com/Business/Technology/Japan-and-UK-to-sign-memorandum-for-nuclear-fusion-collaboration2

 

Japan exports post first decline in eight months on Trump tariffs

18 June, 2025

Japan's exports declined 1.7% year-on-year in May, marking the first drop since September, mainly due to an 11.1% fall in shipments to the U.S. This decline follows the impact of U.S. tariffs, including a 10% general levy and additional duties on steel and auto products. Exports of vehicles and parts to the U.S. dropped sharply, while steel exports also declined. Despite six rounds of Japan-U.S. trade talks, no progress has been made. Exports to China also fell, while those to the EU and Southeast Asia rose slightly. Imports fell 7.7%, resulting in a trade surplus of ¥637.61 billion ($4.4 billion).

Nikkei Asia: https://asia.nikkei.com/Economy/Trade/Japan-exports-post-first-decline-in-eight-months-on-Trump-tariffs

 

Meeting and Working Dinner between Prime Minister Ishiba and President Steinmeier of the Federal Republic of Germany

19 June, 2025

On June 19, Japanese Prime Minister Shigeru Ishiba met with German President Frank-Walter Steinmeier, who visited Japan for Expo 2025 Osaka. They held a 40-minute meeting, followed by a 65-minute working dinner. PM Ishiba also met briefly with a delegation of German business leaders. The two leaders reaffirmed the importance of Japan-Germany cooperation as like-minded partners, especially amid global challenges. They agreed to deepen collaboration in security, economic security, science, and technology, particularly through the Expo. They also discussed enhancing people-to-people exchanges and ties between sister cities. On regional issues, they shared views on Ukraine, the Indo-Pacific, and NATO cooperation, and confirmed continued coordination on global matters.

MOFA: https://www.mofa.go.jp/erp/c_see/de/pageite_000001_01066.html

 

Japan auto export prices to US fall 20% as Trump tariffs hit

19 June, 2025

In May, the export price of Japanese vehicles to the U.S. fell by 21.7% year-on-year, as automakers absorbed the cost of new U.S. tariffs to maintain competitiveness. Although vehicle exports dropped only 3.9%, the value declined 24.7%, reflecting falling per-unit prices. Factors include currency effects and strategic price adjustments. Major automakers like Toyota are holding prices steady despite profit pressure, while others like Subaru have raised prices. The tariffs and price cuts are straining profits and contributing to worsening business sentiment, especially for mid-sized automakers reliant on the U.S. market. No tariff deal was reached at the recent G7 summit.

Nikkei Asia: https://asia.nikkei.com/Business/Automobiles/Japan-auto-export-prices-to-US-fall-20-as-Trump-tariffs-hit

 

Business News

 

Japan drugmaker Chugai invests in Western startups

13 June. 2025

Chugai Pharmaceutical has invested in four U.S. and European startups through its Boston-based Chugai Venture Fund, which launched in January 2024 with a $200 million budget. The fund targets innovative biotech startups in Japan, Europe, and the U.S., aiming to invest around $20 million in three companies annually. Early investments include Leal Therapeutics and Hyku Biosciences. Chugai plans to expand global collaboration beyond Japan, especially in Boston’s strong biotech ecosystem, to accelerate innovation in drug discovery.

Nikkei Asia: https://asia.nikkei.com/Business/Pharmaceuticals/Japan-drugmaker-Chugai-invests-in-Western-startups

 

2025 Expo Osaka : Feast on Food of the Future Made with Innovative Tech

15 June, 2025

At the 2025 Osaka-Kansai Expo, visitors can explore and taste futuristic foods created with cutting-edge technology. Highlights include “regenerated rice,” made from powdered frozen ingredients like vegetables and meat, which helps reduce food waste while preserving flavor and nutrition. Also featured is 3D-printed cultured meat, developed from wagyu beef cells, offering a sustainable alternative to traditional meat with customizable fat and texture. Another innovation is allergy-friendly soft serve ice cream made from beans and rice flour, allowing more people to enjoy the treat. These creations aim to make future food more sustainable, inclusive, and nutritious.

Yomiuri: https://japannews.yomiuri.co.jp/features/delicious/20250615-262831/

 

Wearable Perovskite Thin Solar Cells Tested at Osaka Expo

16 June, 2025

At the 2025 Osaka Expo, Toyoda Gosei is testing clothing equipped with lightweight, flexible perovskite solar cells. The goal is to develop smart wear with built-in cooling fans powered by solar energy, helping prevent heatstroke for workers in hot environments.

Jiji: https://jen.jiji.com/jc/eng?g=ind&k=2025061600802

 

Researchers create first see-through paper for packaging

16 June, 2025

Researchers in Japan have developed the world’s first transparent, biodegradable paper strong enough for use in beverage containers. Created by a team including the Japan Agency for Marine-Earth Science and Technology (JAMSTEC), the material is made from cellulose and is both flexible and water-resistant. It decomposes in deep ocean environments, offering a promising alternative to plastic and a potential solution to marine pollution. The breakthrough came by using lithium bromide to dissolve cellulose and create a dense, transparent sheet. Though currently expensive to produce, the team hopes to lower costs and attract manufacturers. Tests showed the material fully decomposes in seawater within months, and researchers aim for future commercial use.

Asahi: https://www.asahi.com/ajw/articles/15820290

 

Firms Eye Recycling Glass from Solar Panels in Fukushima Pref.; Profitability Seen as Main Hurdle

17 June, 2025

In Fukushima Prefecture, efforts are underway to recycle tempered glass from aging solar panels into home insulation. As solar panels near the end of their 20–30 year lifespan, Japan faces a sharp rise in disposal needs, estimated at up to 800,000 tons annually by the late 2030s. Three companies—Takaryo, Toshima Glass, and Paramount Glass Mfg.—are collaborating to repurpose the glass, which makes up 60% of a panel’s weight. While tests confirm the recycled insulation meets quality standards, profitability remains a challenge due to complex glass composition and high costs. The Fukushima government is offering subsidies to support recycling initiatives.

Yomiuri: https://japannews.yomiuri.co.jp/science-nature/environment/20250617-264308/

 

PETRONAS and JERA Reaffirm Longstanding Partnership Towards a Sustainable Energy Future

17 June, 2025

PETRONAS and JERA signed a Memorandum of Understanding at Energy Asia 2025 to expand their collaboration across the gas value chain, including ensuring reliable LNG supply to Japan. Building on their partnership since 1983, the agreement reflects both companies’ commitment to stable energy supply and joint efforts toward lower-carbon solutions as part of their decarbonization strategies.

JERA: https://www.jera.co.jp/en/news/information/20250617_2189

 

Nippon Steel completes $14bn U.S. Steel deal after 18 months of talks

18 June, 2025

Nippon Steel has completed its $14.1 billion acquisition of U.S. Steel after 18 months of negotiations and political hurdles. Under a national security agreement with Washington, the U.S. government receives a "golden share" granting oversight on key decisions, including plant closures and trade matters. U.S. Steel will retain its name, Pittsburgh headquarters, and American leadership. Nippon Steel committed to $11 billion in U.S. investments by 2028 and transferred its stake in an Alabama plant to ArcelorMittal to avoid antitrust issues. The deal strengthens Nippon Steel’s position as the world’s fourth-largest steelmaker, boosting output to 57.82 million tons. While it positions the company to benefit from rising U.S. steel demand, analysts warn of high investment costs and integration risks due to Nippon Steel’s limited track record with large-scale solo acquisitions.

Nikkei Asia: https://asia.nikkei.com/Business/Business-deals/Nippon-Steel-completes-14bn-U.S.-Steel-deal-after-18-months-of-talks

 

Honda conducts surprise reusable rocket test, aims spaceflight by 2029

18 June, 2025

Honda has successfully tested a prototype reusable rocket, marking a key step toward its goal of achieving suborbital spaceflight by 2029. The 6.3-meter rocket reached 271 meters altitude and landed safely at a test site in Taiki, northern Japan. While commercialization plans are undecided, Honda aims to develop the capability to launch satellites with its own rockets. This effort aligns with Japan’s broader push to expand its space industry, with support from government subsidies and growing interest from other automakers like Toyota, which recently invested in local rocket startup Interstellar Technologies.

Asahi: https://www.asahi.com/ajw/articles/15850685

 

Japan shipper ONE hedges against China risks with home-built vessels

18 June, 2025

Ocean Network Express (ONE), a Japanese shipping company, launched ONE Singapore, the first of 15 self-owned vessels aimed at reducing reliance on Chinese-built ships amid rising U.S.-China tensions. The ship, built in Japan and capable of using eco-friendly fuel, reflects ONE's shift toward fleet independence. With only 27% of its fleet built in China—lower than European peers like CMA CGM—ONE may appeal to European shippers seeking to avoid potential U.S. tariffs on Chinese-made vessels. However, limited capacity at Japanese and South Korean shipyards may constrain future orders. CEO Jeremy Nixon noted that 85% of global trade doesn’t involve the U.S., highlighting the ongoing relevance of Chinese-built ships, especially on non-U.S. routes like those in Europe.

Nikkei Asia: https://asia.nikkei.com/Business/Transportation/Japan-shipper-ONE-hedges-against-China-risks-with-home-built-vessels

 

IHI Group Becomes First Japanese Entity to Win Top Award at CIMAC Congress 2025 for Ammonia-Fueled Engine Cutting Emissions by Up to 95%

18 June, 2025

IHI Corporation and IHI Power Systems received the prestigious President’s Award at CIMAC Congress 2025—the first Japanese recipients—for their presentation on an ammonia-fueled engine. Developed to reduce emissions by up to 95%, the engine represents a major step toward carbon-free marine fuel. After successful land and sea trials, including the launch of the world’s first ammonia-fueled tugboat, the Sakigake, IHI aims to continue advancing ammonia-based technologies to support global decarbonization efforts.

IHI: https://www.ihi.co.jp/en/all_news/2025/resources_energy_environment/1201472_13737.html

 

Demonstration Operation of India’s First Micro Substation With a Power Voltage Transformer Commences

19 June, 2025

Japan’s NEDO and Nissin Electric have begun a demonstration project in India to test a low-impact micro substation using a Power Voltage Transformer (PVT). Installed near Delhi with TATA Power-DDL, the system converts extra high voltage power directly into low voltage electricity, supplying 50–100 homes without large infrastructure. It reduces CO₂ emissions by about 45% compared to diesel generators, cuts costs, and saves space. This is India’s first trial of such a system, and Nissin Electric plans to expand the technology to other underserved regions. A launch ceremony was held on 18 June, 2025.

NEDO: https://www.nedo.go.jp/english/news/AA5en_100477.html

Nissin Electric (press release/PDF): https://nissin.jp/e/news/pdf/release250619.pdf

 

On the Conclusion of a Memorandum of Understanding Aimed at Building a CCUS Value Chain at Yokosuka Thermal Power Station

19 June, 2025

JERA and Kawasaki Heavy Industries (KHI) have signed a memorandum of understanding to jointly study and test carbon capture, utilization, and storage (CCUS) at the Yokosuka Thermal Power Station in Kanagawa Prefecture by 2030. This will be the first CO₂ capture test at a coal-fired plant on Tokyo Bay. The project will use KHI’s low-cost KCC carbon capture technology, aiming to support Japan’s push for decarbonization. The initiative aligns with JERA’s net-zero CO₂ emissions goal by 2050 and KHI’s environmental vision, contributing to a decarbonized society and more sustainable energy use.

JERA: https://www.jera.co.jp/en/news/information/20250619_2192

KHI (press release/PDF): https://global.kawasaki.com/news_250619-1e.pdf

 

This $7,000 single-seat electric car has become a hit in Japan

19 June, 2025

Japanese startup KG Motors has developed the Mibot, an ultra-compact, single-seat electric vehicle aimed at tackling Japan’s narrow roads and weak EV adoption. Costing only ¥1 million ($7,000), the car has a 100km range and is smaller and cheaper than existing EVs like Nissan’s Sakura. Over 2,250 units have already been pre-ordered, outpacing major automakers like Toyota in domestic EV sales. CEO Kazunari Kusunoki sees potential in rural areas with poor public transport, especially among aging populations. The company plans to scale up production and break even after its second batch.

Japan times: https://www.japantimes.co.jp/business/2025/06/19/japan-mini-ev-hit/

 

JOGMEC Provides Equity Financing to Idemitsu’s Exploration Project offshore Malaysia

19 June, 2025

On 19 June, 2025, Japan's JOGMEC announced it will provide equity financing to Idemitsu Sarawak, a subsidiary of Idemitsu Kosan, for an oil and gas exploration project offshore Sarawak, Malaysia. Idemitsu Sarawak holds a 40% interest in two exploration blocks (SK427 and Ketapu Cluster) through a production sharing agreement with PETRONAS and local partners. JOGMEC will finance up to 50% of the subsidiary’s capital. If successful, the project will support stable energy supplies to the Asia-Pacific region, including Japan, and aid Idemitsu’s expansion in Southeast Asia.

JOGMEC: https://www.jogmec.go.jp/english/news/release/news_10_00080.html

 

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