The Takaichi administration has identified 17 strategic fields as priority areas for investment as it seeks to realize a strong economy in Japan, and discussions are currently underway at the Japan Growth Strategy Council. Recent media reports also indicate that 61 key products and technologies have been designated within these fields, with 27 of them selected for early-stage consideration.

The 17 fields are: AI and semiconductors; digital and cybersecurity; information and communications; quantum; defense industry; aerospace; marine; shipbuilding; materials (critical minerals and component materials); synthetic biology and biotechnology; drug discovery and advanced medicine; resources, energy security, and green transformation (GX); fusion energy; food tech; disaster prevention and national resilience; port logistics; and content. In today’s world, where technological innovation continues to advance and tensions between nations—most notably between the US and China—are intensifying, it is easy to see that each of these fields carries considerable importance.

Of course, I do not know any of these areas in detail, but if we are to take on new challenges, I believe we must first have a clear understanding of where we stand today. Even a quick glance suggests that in most of these fields, Japan has already fallen significantly behind other countries—primarily the US and China. There were certainly areas where Japan once held its own, or even performed quite well. What, then, led us to where we are today? A few points come to mind.

・A prolonged period of underinvestment by the private sector since the bubble era
・A lack of strategic government investment in key areas
・Delays in deregulation and regulatory reform
・A society where risk-taking does not pay off
・The handicap of the Japanese language
・A domestic market just large enough to sustain itself, but not large enough to thrive
・Various barriers that prevent talented individuals from coming to Japan

It is a bit discouraging, but this is how it tends to be framed. In this way, Japan appears to have a number of fundamental, and often intertwined, reasons why simply designating priority areas and directing investment toward them is unlikely to succeed. Even if the direction and initiatives of the Japan Growth Strategy Council are sound, unless discussions aimed at addressing the fundamental challenges facing Japan are carried out in parallel, much of the investment may fail to generate returns and ultimately become a burden on future generations. That is what I found myself worrying about.

Now, among the 27 items designated as top priorities within the 17 strategic fields, one of the areas where discussions are progressing most rapidly is shipbuilding. Unlike cutting-edge fields of technological innovation such as AI and semiconductors or quantum, this is an area that carries more of an old-economy feel. A plan is currently underway to invest approximately 1 trillion yen in this area by 2035, through a combination of public and private sector funding. As I was following this news, I happened to come across a feature in the March 7, 2026 issue of Weekly Toyo Keizai titled “Shipbuilding Resurgence: The Future of a Major Shift in National Strategy,” which I read with interest.

Japan once led the world in shipbuilding output. However, it lost its former momentum as it was swept up in the shifting tides of the times, ranging from a strong yen and labor shortages to the oil shocks. In the meantime, China and South Korea expanded their market share significantly, supported by lower labor costs and government backing. Today, the landscape has shifted to roughly 50% for China and 30% for South Korea. In a field that has become increasingly difficult, the current initiative seeks to bring together the public and private sectors to make strategic investments and revive Japan’s domestic shipbuilding and shipping industries. Of course, this is not about attempting to regain market share through indiscriminate expansion in output. Rather, the idea appears to be to build a competitive edge by leveraging digital technologies to construct vessels that significantly reduce greenhouse gas emissions—such as ammonia- and hydrogen-fueled ships—areas where Japan retains a technological advantage.

At first glance, it seems like a reasonable argument. However, even if Japan were currently the only country to possess such technologies, I suspect the gap would be closed quickly. As seen in the history of batteries used in electric vehicles (EVs), technological advantages in manufacturing have repeatedly been eroded in short order through large-scale investment and the resulting cycle of low-cost production and orders.

From the 1990s through the 2000s, Japanese companies such as Panasonic and Sanyo Electric largely dominated the automotive battery market. Today, however, Chinese companies account for more than 50% of the market, while Panasonic, Japan’s leading player, holds only a small share. What seems to matter in manufacturing, it turns out, is not technological superiority. Instead, it is large-scale investment and the ability to secure commensurate volumes of orders; technological advantage tends to follow. This may be one of the more sobering characteristics of modern industrial competition.

As I read the feature in Weekly Toyo Keizai, I found myself thinking along these lines. As for shipbuilding, which has been designated as a strategic investment area, even if it were to succeed in the short term, it would likely end in failure over the longer term. Perhaps a manufacturing industry can only truly dominate on a global scale when it is able to build a chain of low costs, large-scale investment, and substantial demand. That has been the pattern in automotive batteries, consumer electronics, and semiconductors, and may well shape the near future of the automotive industry. In China, that entire system can function within a single country. For Japan, however, that would be virtually impossible. But when I consider whether Japan could truly form close partnerships with countries such as South Korea or the US, or with ASEAN countries and those in Europe, it seems that some degree of conflict would be unavoidable, given the differing political and economic conditions. Common ground may exist at the level of ideals, but…

Of course, I am no expert, and I cannot answer the question: what, then, should be done?

Hirotaka Shimizu
Chairman and CEO
Kamakura Shinsho, Ltd.

Image material：PIXTA