Japan has become America’s essential partner to counter China in the Indo-Pacific

Japan stands as a vital ally for the United States in the Indo-Pacific to counter China. The US is increasingly leaning more on Japan's naval industrial prowess to upkeep and replenish its fleet stationed in the region. Yet, despite the strength of this partnership, there's a lurking concern: an overreliance on Japan might clash with America's aspirations for re-industrialization in the long run. It's a delicate balance between friendship and strategic goals that could shape the future dynamics between the two nations.

Japan and US logistics in the Pacific

After defeating the Japanese imperial armies in the Pacific War, the former became a key ally for American military efforts in the Indo-Pacific region. Washington imposed constraints for Japanese military build-up through the introduction of Art. 9 of the post-war Japanese Constitution.

Simultaneously, through the 1951 US-Japan Security Treaty and its 1960 revised version, the US became the guarantor of Japanese security. Despite the opposition, in what was known as the ANPO Protests, the treaties inaugurated a decades-long cooperation that is still active. The US established multiple bases in Japan, the most relevant in Okinawa, which is still active, and as of today, Japan hosts more than 30,000 US marines. 

However, Japan hasn’t been a passive actor in this relationship. During the Cold War, Japan helped America’s military efforts in Korea and Vietnam, becoming a logistic hub and a center of production for the supplies needed for American troops deployed in the front.

The Japanese-US partnership was essential for Japan’s post-war extraordinary economic recovery and helped to foster its industrial muscle. Besides, the dividends of America’s military Japanese-made supplies helped to stabilize the country after a surge of socialist and communist discontent in the archipelago.

Japan in the strategy of China containment

The historic symbiotic relation between Japan and America has found today a renewed value in the context of confrontation with China. Although in absolute terms the US  manufacturing output to the global GDP surpasses that of Japan, according to the World Bank, manufacturing accounted for 19% of Japan’s GDP in 2022, while in the US contributed for only 11% in 2021.

That shows that although Japanese manufacturing has also suffered the same process of relative decline that all developed economies have experienced, Japanese industrial muscle in high-end manufacturing remains in better shape than America’s. That makes Japan indispensable in America’s strategy to substitute Chinese supply chains.

In the 2022 Indo-Pacific Strategy, Japan figures as one of America’s key partners in the region. The document mentions Japan, along with other allies, in initiatives to strengthen collaboration in areas like technology and STEM student exchanges, security frameworks the QUAD, and enhance “interoperability and develop and deploy advanced warfighting capabilities” for defense response among partners. More specifically, the Indo-Pacific Strategy calls to strengthen ties between Japan and the Republic of Korea to face the Democratic People's Republic of Korea and, to a lesser degree, China.

Indeed, Shinzo Abe, along with Narendra Modi, was a pioneer in presenting the concept of a Free and Open Indo-Pacific as a geopolitical counter-vision to a China-centric regionalization. Also, during his administration, Japan worked to expand its defense capacity. The chance of policy from long-lasting pacifism to reinforce its military capabilities, was often called the Abe Doctrine.”

That trend has been maintained under Kishida. In December 2023, Japan approved its largest defense budget up to this day, $55.9 billion for 2024, increasing 16% its military expending with respect to 2023’s budget, which was $47.7 billion, with a prospected growth of $62.5 billion by 2027. That budget included the acquisition of F35-A and upgrading the capabilities of the Japanese Defense Force Navy, including the purchase of 400 tomahawk missiles from the US.

Along with reinforcing its defense capabilities, Japan has expanded its regional partnership with other governments concerned about Beijing's ambitions. For example, Japan has cooperated with the US, India and Australia in the framework of the QUAD, elevated its security ties with Taiwan in 2023, and in early 2024, Japan and the Philippines began talks about deploying Japanese soldiers in the Philippines.

After the US decides to move away from China-manufactured microchips, Japan aims to reinforce its position in a bifurcated semiconductor supply chain. With increasing difficulties in successfully bringing TSMC manufacturing plants to America, Japan, relying on to its robust industrial culture and work culture proximity to Taiwan, appears better equipped to receive Taiwanese semiconductor production leaving China, than the US.

If there is an area where Japanese industrial capacity will find renewed relevance for the US in the future, that is the maritime sector. In the US, the naval industry declined to a near testimonial level after the 1970s crisis and the profound structural changes that the shipping sector experienced. That presents a stark contrast with North-East Asian economies, which remained strong producers of merchant ships. They concentrate 93% of global shipbuilding production, with China as the top producer at 46.6%, South Korea with 29.2%, and Japan with 17.2% of ships built in 2022. 

That said, in the US, the maritime defense sector presents a different story, and along with the general good health of America’s defense industry, it still has a respectable production capacity. Nevertheless, in recent years, the fatigue of having an underdeveloped civilian maritime industry and lacking its own merchant navy, along with the strain that the ports and shipyards suffered during and after the pandemic, has finally affected some of the capacities to repair Navy ships in America.

Here again, the US relies on Japan's maritime industry to support its needs in the Pacific. To help America's navy needs, Japan plans to expand its shipyard capabilities to repair US Navy ships. In other areas related to the civilian maritime industry, we also see a reliance of the US on Japanese capabilities to bypass China’s manufacturers. In late February 2024, President Biden announced the replacement of Chinese-made port cranes due to fears they could be used to hide Chinese spy devices to monitor American harbors. Washington will resort to Japanese and not American manufacturers to substitute Chinese-made cranes.

Besides the maritime sector, the Japanese industry can reinforce the needs of the US military in other ways. The US has been sending Patriot missiles to assist Ukraine, and that has depleted its arsenals, and American manufacturers couldn’t meet the production need to refill American arsenals on time. However, in late 2023, Japan relaxed its regulation that limits the country’s capacity to export deadly weaponry – for example, Japan cannot export deadly weapons to countries at war, like Ukraine. This allowed Mitsubishi Heavy Industries to sell American-designed and Japanese-made Patriots to the US government. That presents a significant step forward in supply chain integration between Japanese industries and the US Army in the defense sector.

Risks of overreliance?  

Given China’s enormous manufacturing capacities, Washington will need to pull together resources with its allies to balance Beijing’s industrial might. Here, there is an apparent complementarity between Japan's industrial capacity and the US's desire to decouple from China’s supply chains. Tokyo can indeed step into manufacturing needs that American industry cannot reach. Also, from the point of view of logistics efficiency, as it was during the Cold War, Japan might be the best option to repair and service the Pacific Fleet's needs in case of a confrontation with China.

Nevertheless, in the US, the support for decoupling from China has often been framed as an opportunity to bring back industrial jobs to America and regain national industrial self-sufficiency. While we have signs of a decrease in US imports from China, we still have to see that translated into a significant surge of manufacturing in the US. As of today, there are third countries like Japan, but also Vietnam, Mexico, and South Korea who seem to be benefiting from the trade tensions between China and America.

Something should be clear: the potential overreliance on Japanese industrial strength isn't the cause but a consequence of America's weak industrial muscle. An important question to address here is to what extent relying on Japan's industrial capacity instead is just a temporary fix until domestic industrial policies yield results or the way US policymakers want to structure a new post-China geoeconomic configuration of America's global supply chains.

If it is the first option, that will affect the stability of the long-term relationship between Washington and Tokyo once America decreases its reliance on Japanese exports. If it is the second option, that may clash with internal demands in the US for further protectionism and development of American industry. It seems that the Biden administration expects the coordination and support of Japan's industrial muscle to be a structural feature of America's geoeconomic strategy.

Nevertheless, potential risks still exist in pursuing that path. Japanese society has some agency, too. With a strong pacifist sentiment in the country and Kishida currently experiencing difficulties that might pose a threat to the capacity of the LDP to remain in power, it is not unthinkable a scenario of widespread opposition to military collaboration among the Japanese public if the possibility of war with China becomes more tangible. Also, Japan has its own good deal of unclosed grievances with other US allies in the region, like South Korea, that could make coordination difficult.

From the US side, not everyone might be comfortable with decoupling from China to increase reliance on Japan's manufacturing – especially in areas that touch national security.  That might be why in 2023, the Japanese government increased its lobbying activity in DC. On the one hand this shows that Japan sees an opportunity to use its industrial and technological capacity to strengthen its alliance with the US.  Nevertheless, on the other hand, the Japanese government might be concerned about the growing bipartisan consensus in America’s public opinion around the need to reinforce America’s industrial capabilities.

Ahead of the 2024 elections, a hard turn towards protectionism is unlikely to distinguish between foes and allies when protecting American industries and jobs is at stake. The recent polemic surrounding the acquisition of US Steel by Nippon Steel is, indeed, a cautionary story that Japanese authorities and firms are paying attention to.

Whether it is Joe Biden or Donald Trump who occupies the White House for the next four years, they will still need to work closely with Japan on the Asian front and navigate the potential tensions between America’s re-industrialization ambitions and partnering with allies to confront China. Between narrow protectionism and complacency, there is a middle path that should be explored. The next administration will have to make sure America has sufficient industrial capacity but at the same time is flexible enough to cooperate and employ Japanese industrial strength to provide strategic solutions in the Indo-Pacific

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Orion Policy Institute (OPI) is an independent, non-profit, tax-exempt think tank focusing on a broad range of issues at the local, national, and global levels. OPI does not take institutional policy positions. Accordingly, all views, positions, and conclusions represented herein should be understood to be solely those of the author(s) and do not necessarily reflect the views of OPI.