Japan stands at a pivotal moment, with the new government mandated to revitalize economic growth, strengthen trade and supply chain resilience and adapt to an ageing society.
How can Japan unlock new growth, embrace technological change and leverage its demographic shifts to reinforce its global standing?
This session was developed in collaboration with TV Tokyo.
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At Davos, Japan’s new Takaichi government pitched a decisive break from the “deflationary cost-cutting economy” toward an investment-led growth model tied explicitly to resilience and national security. Finance Minister Satsuki Katayama argued that wages rising “over 5% for two consecutive years,” record capital investment, and a soaring Nikkei signal durable momentum. The strategy rests on three pillars, starting with strategic public-private investment in priority technologies. Japan is backing semiconductor capacity (including Rapidus’ planned 2-nanometer production) and “physical AI” for robotics and unmanned operations, targeting over $330 billion in combined AI and semiconductor investment, supported by more than $66 billion in public funds, reinforced by 2026 tax incentives for domestic capex and strategic R&D.
Pressed on debt and rising bond yields, Katayama emphasized fiscal sustainability, citing stronger tax revenues and comparatively low public spending among G7 peers. Geopolitically, Kevin Rudd described Japan as a “force for strength, for stability,” central to Quad cooperation and supply-chain security, arguing US Indo-Pacific engagement is “nothing but growth.” NEC’s Takayuki Morita highlighted Japan’s advantage in real-world AI adoption amid labor shortages: “everybody happy to get robotics and AI into real world.” Business leader Mazen Darwazeh cautioned that competitiveness requires greater openness, faster regulatory modernization, and fewer frictions for foreign participation. Immigration, Katayama said, will remain selective: welcome “good people,” remove illegal overstays, and avoid a European-style scale.
Hello and welcome to this session on Japan. We couldn't be having it at a more interesting moment. An election has just been called in Japan, and we have an incredible panel to discuss, everything Japanese today. I'm Gideon Rachman, chief foreign affairs commentator of the Financial Times, and I'll be moderating today's session. We're absolutely delighted to have with us the Minister of Finance of Japan, Minister Katayama, who is here, I think, in Europe, probably for less than 48 hours. So we're really privileged, really privileged to have you here to explain what the Takaichi government is doing. Also, a really stellar panel, the Honorable Kevin Rudd to my right, former prime minister of Australia, current US ambassador to the US for Australia, and also, an author of books on Us-chinese relations, on XI Jinping Thought and many other things. Then opposite me, Mr. Morita, the chairman of NEC, one of Japan and indeed the world's leading technology companies. And to my left, a longtime friend of Japan, leading businessman Mazen Darwazah, who is vice chairman of Hikma Pharmaceuticals. Minister, let's start with you. As I say, election just called. Everyone is very intrigued to understand what the Takaichi government, which has only been in power relatively recently but has really doing a new start for Japan, what it represents in economic terms. So you have an international audience here to to explain it to if you had to summarize it, what is it? Yeah.
Thank you very much. And good morning, everybody. My name is Satsuki Katayama and Japan's finance minister. This is the most dramatic moment to talk about Japan. Only yesterday. I mean, Prime Minister, our Prime Minister Takaichi, announced officially the dissolution of lower house. She said she will take on our new three major policies onto the choice of Japanese people. And I will speak about or explain about all these streets, starting with, strong Japanese economy through responsible and proactive public finances. And now in Japan, optimism throughout these changes is growing. And a recent survey of young adults confidence in politics jumped from about 20% to over 56% historically high figures and almost 50% viewed Japan's future as bright. It's also quite new. We are different from your country. Exciting political change and expectation for the new administration and Japan's nominal GDP has surpassed 40 billion US dollar and capital investment is at record high and wages have risen over 5% for two consecutive years. And the Nikkei average is now about five times its 2012 level. And these results show Japan is shifting from deflationary cost cutting economy to a dynamic, growth oriented one, driven by bold investment and productivity gains. Today, I would like to outline the three key pillars of our growth strategy to turn this momentum into sustainable progress. And the first pillar is strategic investment in priority areas in a country facing future population sharply declined. Achieving a strong Japanese economy requires strategic fiscal action and, based on responsible and proactive public finances, by strengthening Japan's supply structure and leading growth, we aim to lift incomes, restored consumer confidence also and create a vicious cycle of improving corporate profitability. We are advancing bold and strategic investments that enhance growth and resilience, against resilience, against potential crises, to strengthen Japan's supply capacity. More concretely, we will provide proactive public private investment to address risks such as economic, food, energy and resource security through delivering products, services and infrastructure that helps solve the global challenges. We will drive Japan's further economic growth. For example, we are strengthening the semiconductor supply chain through initiatives such as the Rapidus project, which would enable domestic production of cutting edge two nanometer chips. And we are also advancing physical AI, which would enable autonomous robotic assistance and unmanned plant operation by aggregating and cleaning high quality data. And we aim to achieve more than 330 billion USD of public and private sector investments in the AI and semiconductor sectors by improving predictability for the private sector through over 66 billion USD of public support. These key measures for building a strong Japanese economy are also reflected in the 2026 tax reform. Two specifically, we will introduce tax incentive measures for promoting domestic investment in high value added assets. In addition, we will establish a new category under the R&D tax system designed to incentivize corporate R&D in national strategic technology domains such as AI and quantum and biotechnology. And yeah.
Yeah, okay. Thank you very much for setting that out. And you're obviously, explaining a lot of things that you intend to inject new dynamism, new hope into the Japanese economy. But it also sounds quite expensive. Some of it, you know, there's a lot of spending involved. Also, on defense, I gather, in the new geopolitical environment, which I'll ask Kevin about in a minute. Some bond investors seem to be a bit nervous. I was just talking to some Japanese finance people. They say the bond yield in Tokyo is going up. What do you have to say to people who are worried, particularly in the bond market, about the implications for Japan's debt?
Yes. Since last October, since I assumed my post, I have been continuously, talking with financial sector, pension, insurance and all the institutional investors that we keep on going with sustainability of our public finances. And in the formula in the formulation of last two economic package, we could have kept our dependency ratio upon GDP lower than the previous one. That is incredible. But that was feasible because tax revenue increased and our dependency ratio upon debt is as low as 24%. It's 10% lower than it used to be. And our this year's public expense ratio, onto our nominal GDP, is by far the lowest among G7 countries. So that's the result. So we are trying to keep the sustainability.
So you.
Along with we are increasing spending.
Yeah. And you're confident that that what growth will make up for the will generate enough revenue to make all this possible.
Yes. We firmly believe in we should sharply move from the extensive, cost cut economy toward vital boosting investment economy. And it will bring about more tax revenue and more consumption. And that will have a vicious cycle of economy.
Okay, final question for you. Before I turn to the rest of the panel, as you look at the Japanese economy in this new geopolitical situation and also massive technological change, AI and so on, what do you see as the sectors where Japan can really excel?
Yeah, we have already designated 17 fields include AI, AI related robotics, physical AI, semiconductor fusion, quantum and maritime and defense. And whereas, all major fields of which we can say that will be also that will do also good to not only to Japanese economy, but also Japanese national security or future resilience. So that's why we are called these investment not only growth strategy, but also, crisis management.
Okay. Well, you mentioned national security. And Kevin, this is an issue you've followed across the Indo-Pacific. And one of the striking things about the Takaichi government was that almost as soon as she came in, she found herself embroiled in a row with China over a statement the Chinese objected to on Taiwan. The Chinese, in a fairly typical fashion, ratcheting up pressure on Tokyo. Watching all this, how do you see Japan's? How do you interpret those incidents, but also in the broader context of Japan's geopolitical situation?
Good, thanks. I'm ambassador in Washington, but I'm here in a private capacity. So these are my remarks. Firstly, Australia and I think the rest of the Indo-Pacific is very bullish about Japan. And listening carefully to what Minister Satsuki just said about the economic program of the Takahashi administration, Takaichi government, we draw great encouragement from that. And Japan across the Indo-Pacific is seen as a force for strength, for stability, and increasingly for prosperity. Remember the enormous source that Japan still represents in terms of foreign direct investment right across the the Indo-Pacific region. On the specific questions you raised in relation to Japan and China, as you know, the history of the China-Japan relationship has been problematic, over many, many decades. I am confident that this current set of, difficulties will be overcome by both governments. The bottom line is for countries like India, like Australia, we are strong quad partners of Japan. All four countries, together with the United States, are committed to long term strategic stability in the Indo-Pacific. Furthermore, and we are collaborating with Japan intimately on the future supply of critical minerals, rare earths, both raw and refined, as well as in critical technologies. And also what we are doing with Japan is enhancing not only our own defense relationship with Japan and with Korea and with India, but increasingly we find the collaboration across our respective defense communities becoming closer and closer, quite apart from our separate alliances with the United States or in the case of India, of course, it's not an ally. So you put these factors together. I mean, the Indo-Pacific, looking at a large economy like Japan, looking at a large source of foreign direct investment. Our friends from NSC are here, for example, looking at Japan as a source of innovation, advanced manufacture and now a government under takagishi doubling down on bringing AI across every element of the Japanese economy. So we see a positive story emerging from Japan, and one which we think will add to aggregate strategic stability in the region. And the Japan-china relationship, always problematic, will continue to be managed.
Okay. Mr. Morita, I mean, you lead one of Japan's most important companies in, you know, the technological area that's changing so fast as you look at the opportunities for your company and indeed your country. How do you see it?
Yeah. Possibly the big difference I saw in the last few years is that people started openly talking about, like, national security together with the economy, right in the past. And we are kind of reluctantly splitting those two types of things. But now, we are seriously consider that these two are closely tied, and I'm very much welcoming, like openness of new Prime Minister Takaichi. And, she clearly mentioned, like, this kind of close ties between the two and then and the forecast area of 17 is including defense as well as a high kind of advanced technologies, so that we should think about. And, also, I think thanks to the AI and we see the great opportunities coming in. And as far as I understand, we are in a very early stage of implementing AI in real our lives. And we are talking about Gpgpu, we are talking about ADM, we are talking about data center. But that's going to be a very, very, infrastructures in the sense in order to, make use of those kind of new innovation, we have to change the society. We have to change the education. We have to change the people. We have to change the way of doing everything right. So in that case, and I think we really need to use the data, which is not, on the internet, and it's a real life, real world data and intuitive data and also the some kind of proprietary data. And those things will be realized by like, very, specific, language model that is a small language model, which is a kind of a well trained for very specific purpose. And also the agents, agents, agents and many agents. So together with those things and implementing into real environment by using like, real world data, that's going to be happening in real application. And I think that areas is Japan is a very much good at. And also, the biggest issue we are facing is a kind of social resistance. But Japan, right. People population is declining. Right. We are suffering from the shortage of, workforce. So who blame it? Right. And everybody happy to get robotics and AI into real world.
So are you saying that the kind of the concerns that others have about, well, is AI going to take a lot of jobs in Japan? It's rather different because you have a shrinking labor force anyway, right?
Right, right.
Yeah. Okay. Just one other question. I mean, certainly reading the business press, the whole question of the development of AI is often portrayed as a US-China battle. Those are the two countries that are leading a race, if you like. And the rest of us are kind of nowhere. But Japan is a, you know, a very advanced technological power. Do you see a role for Japan at the cutting edge of all this stuff?
Yes. I think that's why the Japanese government is a kind of heavily investing in that field. I think we have to admit today. Right. And, public private collaboration, must be happening in order to cope with, like, global competitiveness, especially in the area of infrastructure, digital infrastructure, how to protect the country, how to build up those kind of infrastructure, water, electricity. Right. And those are kind of, key element for industry, but, that have to be affordable price. Right. So I think, like that is a kind of responsibility of our nations. And I think that's, I'm expecting Japanese government to take a lead.
Okay, well, I'll ask about that in a second. But, Marwan, I mean, you're a long time friend of Japan, a long time visitor to Japan, known the country for 40 years and doing business there. How do you see it? Its current situation?
Well, I'm quite intrigued. And by the positive news I heard from the minister and, about the technology and advancement in Japan. But once it comes to reality, my experience in Japan, I'm talking about as an outsider from Japan. Japan is the first country they have first class platform of intelligence, first class technology. Everything is at the top, but at the same time, it's a closed society whereby it's difficult for outsiders to do business in Japan.
So even for one like you who's been going there a long, long.
Time, it's difficult and it takes time to to unpeel the layers in Japan as they say it. Number one. Number two, I feel that Japan was on the quantum leap in the 80s and the 90s in terms of R&D, in terms of technology, especially in pharma and other aspects. But during the last couple of years, I have witnessed a shrinking in the expenditure of R&D. And the minister just said that. So all of these things have led to a vacuum of certain, especially in my field, in the healthcare whereby we saw the neighbors of Japan over beating Japan in terms of technology, in terms of targeted therapies, and in terms of new advancements. Now we have new Japanese companies that are going into this. I'm sitting on board. One of them recruited medical, where we're using artificial intelligence for tumors. We're doing studies in Japan. But even on that level, and until today, the Japanese laws do not allow, for example, cross-cultural, bioequivalence studies that are being conducted from overseas in Japan. So the Japanese government has to open more on the outside world in order to develop that process of engagement. So they have to open, not stay. As a closed society. I respect Japan as a close society after, what historically. But for me to become competitive, especially with the declining, population. Now, you're not seeing a new generation. Now, the new generation, for example, the old generation doesn't talk English. The new generation is now quite well knowledgeable. You see a paradox in Japan. I'll just say this for humor. I was in Osaka during the expo. I was shocked. I went to Nara with my wife. You know, we wanted to go to the temple. We couldn't enter the temple because they don't take credit cards, for example. I mean, in the 21st century, who does that? And there are certain things, I think, that we need to adapt in order for Japan to be back where it was. Japan was always at the forefront of technology, the forefront of delivering new ideas. I would definitely like to see Japan being there now. From what I heard today, I hope with the government and with the new fiscal policies, we will be back on track as we go forward.
Okay. Well, some interesting views from a kind of slightly critical friend. Minister, I'd like to give you a chance to respond. Do you think it's fair to say that Japan is still in some respects a slightly closed society and that you need to do more to open up, or is that a misunderstanding?
Yeah, Japanese economy is, I think I honestly think it's a relatively open one. But the hesitation of, for example, testing of article is not coming from that. We are closed. But Japanese, people have a tendency not to cooperate with that kind of testing. So we increased our R&D budget by a great deal last year, supplementary budget and this year. And that will try to put any many research and development as possible, as many as possible into domestic field. But, we let that field of your field, legal exemption because because we are in short of that. And but this is true, that research and development is essential in many fields. And as for medical sector, let's say 10 or 20 years, they were aiming for a bigger, business. But after all, most of our big pharmaceutical companies finally had a license capital alliance with big worldwide spreading companies. And now, they often come to see me because last year was a year of medical and pharmaceutical budgets, and that is the tendency to be lowered by Trump administration. So they came to ask me to stop that lowering. We cannot bear anymore. That kind of difficulty is always rising in the sector. It's particular because in Japan it's universal health coverage, but in the United States it's not. And US government is trying to minimize the expense onto that compensation for American people. And some are aiming for more universal. So that is a big social and political problem that we have to think about it.
Very interesting. Yeah. And in fact, I think that that pressure from the Trump administration on pharmaceuticals points to a broader issue for Japan, actually for all countries in the world. But we're talking about Japan, which is that, the United States is, a less reliable partner. I think we can say that it has imposed tariffs on Japan. It's close ally, that it is demanding massive Japanese investment in the United States. And at the same time, your other major trading partner, as Kevin was saying, very difficult relationship with China. Just got a bit more difficult. I gather the Chinese, when I was last in Tokyo, it was full of Chinese tourists. And now I'm told they're they've been told not to come and things like that. So how do you, as a, you know, one of the world's largest economy but not a superpower, navigate this new geopolitical environment and run an economy? When you have both the US and China putting different forms of pressure on you.
I missed the last. It's a very good question and always posed to us. We are between United States and China for a long years and we can't move geopolitical. And we did have a war. Or with both of that, we know both of them very, very well. So finally, we had the only national security treaty with the United States. The United States is the only ally in this field. And even last week I was in Washington, D.C., and my friend Scott Bassett was organizing G7 Critical Mineral Meeting. It was very successful. And on that sense, we are facing the restriction from the side of Chinese government without any good reason. But it also happened. It's always happening since 2010. This leads now nothing to do with trade or economy just for another reason. But whatever it happens, United States and our allies G7 are way over our heads, and Japan is the only country which have seat in G7. And it's been 50 years, five zero years. We have the only country in Asia who have a complete free currency. So that's my answer. We, the politically, we are always trying to be in our best position. And now it's as it is.
Kevin, putting your hat on as a geopolitical thinker. It seems to me it's like a common dilemma for a lot of middle powers. Japan, but also Australia, also Canada. You see Mark Carney trying to sort of chart a new direction for his country. How does one navigate between an unpredictable United States, where you're based right now and China?
I think the first principle is in the Indo-Pacific. If you look carefully at the Trump administration's national security strategy, which I have, it's very clear where its priorities lie. And it is also clear that the future of the Indo-Pacific is of fundamental national security significance and economic significance to this Trump administration. Whatever noise occurs in the public debate about foreign policy and national security policy, have a look at the fundamentals of the agreed interagency administration wide position within which they see enhanced roles for allies such as Japan, the Republic of Korea and Australia, and also the Philippines within the region. So that is kind of pretty fundamental. It's a different set of geostrategic circumstances to that which we now see in relation to Europe and the transatlantic. I think the second point is going back to the China dynamic. The reality is, because Japan is a long standing treaty ally of the United States, so is the ROC. So is Australia. India are more recent strategic partner of the United States. That creates of itself underlying and continued structural tensions with Beijing. That's just a reality. And the challenge of foreign policy and economic policy is simply to navigate within that reality rather than pretend that reality doesn't exist. That's why the Japanese Self-Defense force continues to grow. The Australian Defence Force continues to grow similarly in India and similarly in the ROK, and they work increasingly together. Thirdly, for the future. And again, it goes back to an earlier comment I made about Japan Open society, closed society. I've been to Japan many times. I like the place a lot, don't know it as well as you. I know China very well. I speak Chinese, I don't speak Japanese, but, if we take the existing arrangements which underpin, our, shall we say, common endeavors in the Indo-Pacific, it's a Japanese idea to create a free and open Indo-Pacific. That's a Japanese idea which the rest of us have accepted. It's a Japanese led initiative to have the Trans-Pacific partnership 11 minus the United States, because they're currently in a protectionist frame of mind. But if you take those two visions carefully, it answers your question about how can Japan and the rest of us open increasingly to each other Japan, Korea, Australia, India, the four largest economies outside of China, in the Indo-Pacific? If you put those four together, you're looking at a critical mass of goods and services, investment markets and technology. Before you look at our external links with Europe. So finally, in terms of navigating the US relationship, this is an ongoing, pragmatic challenge for each of us. But I'm saying in the Indo-Pacific, the fundamentals are of a different nature to those which pertain in Europe at present. Just a quick one.
The national security strategy you refer to and then subsequent US actions in Venezuela and now towards Greenland, there's this new emphasis on the Western Hemisphere. Are you concerned at all that that sort of is a nod towards a spheres of influence world, which would see a decline in US role in the Indo-Pacific?
Well, I think you apply their zero sum game. It's one or the other. Let's, let's take three traditional areas of us strategic engagement. Number one, the Indo-Pacific, China-US strategic competition. Number two, the transatlantic and Europe currently, seeing the dynamics of Russia, Ukraine and three, the Middle East and all of its complexity and its sub theaters, of which there are many underpinning that is an abiding Republican concern and MAGA concern about their own hemisphere, and certainly about increased Chinese presence in Latin America, both the Caribbean and mainland Latin America. It is therefore understandable that this administration places now a new priority on Latin America, but it is a false analysis of their national security priorities to see an increased, shall we say, activity tempo in Latin America and a parallel decrease in the Indo PAC. I was recently an Indo-Pacific command in Honolulu with Admiral Paparo. There is nothing more. There is nothing but growth occurring in the Indo-Pacific in terms of US capabilities, US operations, and US engagement with the rest of us. It's a different reality.
Okay, Mr. Morita, I mean, in your earlier remarks, you said, that tech and defense are increasingly important and we know the Japanese defense budget is going up, but Japan has its own very specific culture on defense has been worried, for example, about defense exports. Do you think that is changing? And do you see Japan developing a really significant defense tech sector? Now in this new change situation.
I feel that definition of defense is changing over time. Right. And cybersecurity. Right. And are you talking about cybersecurity as a part of defense or war and Army or something? And also we are doing a submarine cable, which is a very much essential part for protecting the country. But it's a cable and connections and broadband bandwidth. Right. But that's a very much essential for protecting like, digital infrastructure structures for the country. And we see that a lot of things happening in that areas. So Japan, without like kind of arguing those kind of things. This is a part of defense. This is not defense. We are talking about advanced technology, which is a kind of increasing the protection of the country. Right. And for example, like a satellite, right, a satellite constellation is can be used for like observatory of situations and surely helping the country to protect its land and also submarine cable as well, and also AI, for example, Japan is one of the few countries who can develop the large language model from scratch, so it's a pretty much autonomous like, independency. We can capture Japan in a position of sharing that benefit to other countries other than China and the United States. That's a way I think we can contribute to, like increase of protection on the peaceful world. That's I think we should do.
Okay. I want to give the audience a chance to ask some questions in a second, but a last one for for the minister. Yeah. Prime Minister Takaichi is the first female prime minister of Japan, and you are the first female finance minister. And I remember in previous Japan sessions during the Abe period, there was a lot of talk about Womenomics. Are we now actually seeing it in action that, Japan is mobilizing its, its female talent? Really? And is that part of your pitch going into this election?
Of course. It's always part of our pitch. And also we are trying to protect and reinforce what Mr. Morita has said. This is the force of our industry and super high tech area. Only Japan can do that. And also a sort of financial technology which are coming. Maybe Japan could be a little bit advanced in the coming digitalization of finance and coming, crypto currency utilization, because we are still on the level of, testing even in the United States. But Japan is the first country to introduce legislation onto that. I had a talk with Scott on this matter, too, and maybe in near future, in a very near future, we there will be, stablecoin market exchange between dollar and Yam and maybe a little better with Euro and this kind of new proposition can be posed from Japanese side because Japan is Japan. And so it's not only women, but we would like to take advantage of what we are like. These two gentlemen mentioned kindly to us.
Okay. Excellent. Let me see. Is there any questions from the audience? Anybody like to ask a question to the panel? Yeah, I see a hand over there. Microphone for you. If you could identify who you are as well. That's always helpful.
Hi, I'm Ian Lindsay, advisor to the prime minister of Bahrain and a former British diplomat in Tokyo. My question is to Satsuki Daijin, the debate on immigration in Japan. This has been ongoing for for quite a while. Japan's, rate of immigration is very low compared to the OECD. Foreign residents only represent 3% of Japan's population. OECD average is 15%. Clearly, we've already had references to Japan's aging population. And that's one of the reasons why foreign workers have been brought in. But that has caused something of a backlash. The governors of all the prefectures have just issued a statement calling for a rational debate on immigration. Minister, how can we see this going forward? Does Japan need more foreign workers? And if not, why not?
Thank you very much for the question. This is a hotly discussed matter. Maybe in the coming election, that will be one of the matter between us and the opposition. But we all say our LDP party says that we are in a position to welcome those who are good to us in any sense. Good friends coming in and those who did something wrong or illegal should be left. But we couldn't reinforce the latter in Leo stages. That's why we have certain voluminous population illegally coming to Japan and staying, and that will increase the Japanese feeling of uncertainty in that particular area. That really happened. So we changed the mode of our labor license, a mode of a new coming and businessman visa. It was very, very cheap compared to your country. We raise it to the international level. That's what we are doing. And but that is true, that Japanese culture is a very, very special one. And I was in France for two years, and I remember the day I taught on the administration, they tried to assimilate all people coming from their ex-colonies ex-colonies. They speak French perfectly, but even that there was a strong negative feeling among Parisians or French people, a different culture. So we also feel different culture because the ratio of foreigner attained 3% and some in some areas it's very tension still so concentrated the ratio is higher. So we would like to ease these uncertainties and we would like to welcome those good people and not bad. So it's very clear.
Just to summarize, do you expect overall numbers of immigrants to rise gradually or to come down a bit?
Now we are not very sure of the percentage, but we we are not imagining that situation where we, our society will be like European countries. That is very different.
So, yeah. Gentlemen here. Server that.
Hi I'm Yamada from McKinsey. Question to Kevin. Japan has some strengths in the semiconductor value chain. Contains 50% market share of some of the critical materials such as photoresists, silicon wafer and all that. The question is, how could Japan use these supply chain value chain strengths towards some of the strategic allies, as well as also some of the competitive contenders it has?
I think there are two dimensions to two core dimensions to supply chain vulnerability as they impact Japan. And frankly, the rest of us across the Indo-Pacific and the world. One is where we now find ourselves in terms of semiconductors and their inputs. And then secondly, more broadly, in terms of critical minerals and rare earths. On the first, it's no, no mystery that in terms of semiconductors, we look to, TSMC, we look to Samsung, and we look to Intel. And with some Dutch lithography on the way through, so the reality is, these, overall semiconductor supply chains need to be broadened. There's no better country to participate in the broadening of that than Japan, because, as you know, compute coming out of semiconductors determines and shapes AI, the entire AI stack. And those of us who succeed and welcome and adapt and adopt to the AI universe will prevail. And those of us who don't will not. On the second part of the equation, which is critical minerals and rare earths. We have observed carefully what's happened in Japan historically and more recently in the United States in terms of vulnerabilities. So we have acted Australia equals the periodic table. Okay. That is it's not because we are necessarily particularly clever. It's just that that's our real estate. But we are very clever at mining, extracting and refining this stuff. And so what we've just agreed and negotiated with the United States in the last several months under the Trump administration, through Prime Minister Albanese. And I've been intimately engaged in the negotiation of it as a critical minerals and rare earths accord. It is real. It is substantive. It is project specific, mine specific, processing facility specific. And if you look at the trajectory of where we'll now go on raw and refined rare earths over the next three years, it will radically change America's current vulnerabilities, the opportunity for Japan and Korea and other partners, which we are already working on with both Seoul and Tokyo and frankly, with the Europeans, is to ensure that we add on through the G7 mechanism, which Minister Suzuki attended just last week. In DC. I was there as well with our finance minister is to broaden this out to the G7. Plus, that removes this as a vulnerability in terms of supply chain interdiction. And that's necessitates industrial policy intervention. And for those of you who purchase, and need critical minerals and rare earths into the future, it will mean a price adjustment. But there's an offsetting factor here. Security of supply means industrial policy. Intervention means a higher price. But you have security of supply long term. Otherwise, the immediate so-called market price will always be low when it's manipulated by certain external actors.
Okay. Well, it's a sign of a great session that I've 100 follow up questions I would like to ask, but we actually only have 20s left, so I'm afraid we're going to have to call a call A, but I'd just like to thank particularly the Minister, for taking time at such a busy time in Japan. We really appreciate it. And also to the panel for a really lively and interesting discussion. Thank you all very much.
Thank you. Thank you, thank you so much. Thank you so much. Thank you. Good to see you.
Good to see you.