Japan considers nationalizing private facilities producing key materials in response to Chinese export restrictions

In terms of economic security, the Japanese government is considering temporarily nationalizing and renovating old private facilities that produce important chemical products and castings.

According to the Nippon Keizai Shimbun on the 13th, Japan's Ministry of Economy, Trade and Industry is considering such a plan to maintain the production base of key materials that rely on supply from specific companies that lack financial power.

This is a measure to protect the domestic supply chain in response to China's strengthening export regulations.

The Ministry of Economy, Trade and Industry expert meeting began discussions on the matter the day before.

The Japanese government plans to reflect this in the economic security action plan to be revised in the spring of 2027 and legislate it.

Targets of nationalization are key materials that would inevitably be overly dependent on specific countries if production in Japan were halted.

It is only applied exceptionally in urgent situations where the old local sole factory may stop operating at any time.

Specifically, the 'Government-Owned Facilities Private Operation' (GOCO) method is utilized, in which public institutions such as independent administrative corporations purchase facilities, update them with government funds, and then entrust actual operation to existing companies.

Once facility investment and depreciation are completed, the facility is returned to the private sector.

There are related provisions in the current Economic Security Promotion Act, but there are no cases of actual application.

The Japanese government plans to increase the effectiveness of the system by referring to the case of the United Kingdom, which acquired a special steel manufacturer in financial difficulties in 2021 with government funds and entrusted its operation.