2026-08-13
At the very end of a Bloomberg article, an extremely important statement appears.
Kyle Chan, a fellow at the Brookings Institution who studies China’s technology and industrial policies, says:
“Ultimately, what will determine the outcome of the technological competition between the United States and China is large-scale and sustained investment in both innovation and industrial capacity. The country that possesses all of these elements will gain a lasting advantage.”
These words were spoken about the United States and China.
But I believe that these are precisely the words that Japan’s Ministry of Finance and the Old Media must now confront directly.
And yet, what are Japan’s Ministry of Finance and the Old Media thinking?
Around the world, investment in such fields as AI, semiconductors, quantum technology, space, robotics, biotechnology, energy, and advanced materials is no longer merely a matter of corporate capital expenditure; it has become a struggle that will determine the very power of nations.
What the United States and China are competing over is not this year’s fiscal balance.
What is at stake is the very destiny of nations: ten or twenty years from now, who will control the world’s core technologies, who will possess the production facilities, who will dominate supply chains, and who will determine global standards.
What is most important here is that Kyle Chan does not speak only of “innovation.”
He also speaks of “industrial capacity.”
Even if a country produces the greatest invention in the world inside a laboratory, it will not become national power if that invention cannot be mass-produced domestically.
Even if it produces the world’s finest academic papers, unless it can turn those achievements into products, build factories, supply materials, secure electricity, develop human resources, and capture global markets, the fruits of that achievement will be taken by other countries.
How many times has Japan already experienced this failure?
Liquid crystal displays, solar cells, semiconductors, digital platforms.
There are far more than one or two examples in which Japan stood at the forefront of research and technology, only to fall behind at the stage of industrialization and large-scale investment and surrender enormous markets to other countries.
Despite this, if every discussion of national investment begins with nothing but “Where will the money come from?”, “Government debt will increase,” and “This will burden future generations,” then that way of thinking itself is no longer suited to interstate competition in the twenty-first century.
Of course, I am not saying that wasteful expenditure should be permitted.
It is precisely the argument that confuses these two things that is foolish.
Expenditure that simply disappears and investment that creates future income, tax revenue, technology, industry, employment, and national-security capabilities are fundamentally different things.
It is absurd in itself to place wasting 10 billion yen and investing 10 billion yen to create a one-trillion-yen industry in the future into the same box labeled “government spending.”
At the same time, fundamentally restructuring the priorities of the national budget is also an urgent task.
In fiscal 2026, the budget related to the Basic Plan for Gender Equality amounts to approximately 433 billion yen, while the Children and Families Agency budget totals 6.3913 trillion yen when the general account and the Children and Child-Rearing Support Special Account are combined.
Existing policies into which enormous amounts of public money are poured every year, including gender-equality policies and the Children and Families Agency, must be subjected one by one to a thorough examination of their achievements and cost-effectiveness.
It seems to me that among them are many programs that it would scarcely be an exaggeration to describe as an accumulation of waste, programs whose purposes overlap, and programs for which results commensurate with the tax money invested can hardly be explained.
If we say that “there is no funding” for investments in semiconductors, AI, quantum technology, energy, space, biotechnology, robotics, advanced materials, and human-resource development—investments that will determine the nation’s future—while continuing year after year to pour enormous budgets into existing systems as though they were sacred and untouchable, then the priorities of the national budget have been completely turned upside down.
What is needed is not simply spending cuts.
What Japan must do is cut expenditure that does not create its future and boldly redirect national resources toward investment that does create its future.
Every business executive knows this.
A company that does not invest declines.
It does not renew its factories.
It does not conduct research and development.
It does not develop human resources.
It does not enter new markets.
And if a company proudly announced every year, “We reduced our debt again this year,” while doing none of those things, it would be obvious what kind of future awaited that company.
Is a nation really any different?
Indeed, in the case of a nation, technological strength and industrial capacity are themselves matters of national security.
Without semiconductors, even automobiles cannot operate.
Without AI computing infrastructure, a country cannot compete in next-generation industries.
If another country controls your energy supply, you lose diplomatic freedom.
If medicines are dependent upon foreign countries, even the lives of your citizens in an emergency can be left to the decisions of others.
If shipbuilding capacity, production facilities, machine tools, materials, communications, and space technology are lost, even national defense capabilities cannot be maintained.
Industrial policy, in other words, is economic policy and national-security policy at the same time.
The Japanese government has finally begun to recognize this clearly in actual policy.
In AI and semiconductors, a national framework has already been established to provide more than 10 trillion yen in public support over the seven years through fiscal 2030 and, using that as a catalyst, to encourage more than 50 trillion yen in public-private investment over ten years.
The fiscal 2026 budget also provides large-scale support, including massive investment related to next-generation semiconductors and the development of foundation models looking toward AI robotics and Physical AI.
This is the right direction.
The question is whether this will be treated as an exceptional and temporary policy or placed at the very foundation of national governance.
Look once again at the words Kyle Chan used.
“Large-scale.”
And “sustained.”
Those two words are the very heart of the matter.
Allocate a budget for just one year.
Cut it when the economy deteriorates.
Cut it when fiscal deficits become a topic of discussion.
Lose resolve when the Old Media calls it “reckless handouts.”
Japan cannot win global technological competition in this way.
Semiconductor plants, the research strength of universities, human-resource development, power grids, and quantum technology all require periods of ten or twenty years.
China continues such efforts on a national scale.
The United States also understands that competition with China is itself a matter of national security and invests accordingly.
If Japan alone simply stares at annual fiscal-balance figures, the outcome is predetermined from the beginning.
And I also want to ask the Old Media a question.
Whenever news emerges of massive investment in technology, do they not first ask about “funding,” then about “the burden on the public,” then about “fiscal deterioration,” and end their reporting there?
Those are not the only questions that should be asked.
What will Japan lose ten years from now if that investment is not made?
Have they ever calculated that?
If they write about the risks of investing 2 trillion yen, should they not report with equal seriousness on the risk that, by failing to invest that 2 trillion yen, Japan may lose markets worth 20 trillion, 50 trillion, or 100 trillion yen to foreign countries?
Fiscal deficits have numbers attached to them, so they are easy to turn into news stories.
But a future that has been lost has no number attached to it at the moment it is lost.
Is it not precisely the ability to foresee that future that we call intelligence?
I would say the same thing to the Ministry of Finance.
A nation’s credibility is not determined by the outstanding balance of government bonds alone.
What can that nation produce?
How much technology does it possess?
How many factories does it possess?
How many people can it develop?
How much energy, food, and critical materials can it secure?
All of these things together constitute the credibility of a nation and the power of a nation.
And it is absurd to isolate a single figure—government debt—and use it to judge the economic foundations and future investment capacity of Japan as an entire nation.
If we are to evaluate national strength, we must also look at the enormous assets held by the government, the country’s overall external assets, the financial assets of the private sector, its industrial base, its technological capabilities, and its human capital.
Japan’s net international investment position alone stood at 561.7504 trillion yen at the end of 2025.
I believe that Japan’s overall national balance sheet and underlying economic strength are so robust that it would not be an exaggeration to call them among the strongest in the world.
Nevertheless, the Ministry of Finance has placed the outstanding balance of government bonds at the forefront, while the Old Media have continued to transmit virtually the same logic directly to the Japanese people.
As a result, ideas such as “Japan has no money,” “Japan cannot invest because its fiscal situation is difficult,” and “spending must be restrained for the sake of future generations” have been imprinted upon Japanese society as though they were absolute truths.
But if we truly care about future generations, government debt is not the only thing we should ask about.
How much technology will we leave to future generations?
How many factories will we leave them?
How many researchers will we leave them?
How much energy-supply capacity will we leave them?
How many internationally competitive companies will we leave them?
And how strong and prosperous a Japan will we leave them?
Is that not the true meaning of “responsibility to future generations”?
How can handing our descendants a country whose fiscal indicators have been tidied up while its industries, technology, and research capabilities have declined possibly be called responsible fiscal management?
That is not fiscal consolidation.
It is the weakening of the nation.
And if the Ministry of Finance truly attaches importance to fiscal discipline, then all the more reason why the cost-effectiveness of every existing budget should be examined.
Budgets are continued merely because they have existed for many years.
Budgets are allocated because ministries and organizations exist.
Once a system has been created, it is protected as though it were a vested right.
If, while doing this, only investment in research and development and industrial infrastructure—investment that determines the survival of the nation—is bound by arguments about “funding,” that is not fiscal discipline.
It is merely rigidity in budget allocation.
Cutting waste and cutting investment in the future are completely different things.
Fiscal management that cannot distinguish between them is not even frugality.
It is a policy that impoverishes the nation.
Japan’s fiscal 2026 Science and Technology Promotion Budget amounts to 1.4378 trillion yen.
Then Japan should pursue this direction thoroughly.
But here we must ask an even more fundamental question.
Why have the Ministry of Finance and the Old Media continued for so long to engage in conduct that could scarcely have been more foolish?
I believe the greatest reason is that they lack the concept of “The Turntable of Civilization.”
They see Japan merely as a country with a declining population, as merely one of the advanced countries that once achieved rapid economic growth.
That is why what they see before them is the immediate fiscal balance, the outstanding balance of government bonds, and whether this year’s or next year’s accounts add up.
But that cannot reveal the true nature of Japan.
“The Turntable of Civilization,” about which I have written for many years, is not a concept concerned merely with economic scale.
It is the recognition that, through divine providence, the center of civilization moves toward countries whose civilization, culture, and intelligence have matured and that bear a responsibility to use those qualities for the benefit of the world.
And now, that “Turntable of Civilization” is turning toward Japan alongside the United States.
I am convinced of this.
Japan possesses a level of civic culture that it would not be an exaggeration to call the highest in the world.
Japan possesses an intellectual level that it would not be an exaggeration to call the highest in the world.
And Japan possesses extraordinarily beautiful nature and culture, rare even in the world, and has preserved them for thousands of years.
This was not created in a single generation.
It is civilization itself, handed down from generation to generation by countless Japanese people who have lived in this country over thousands of years.
That is why the governance of Japan cannot be discussed solely in terms of a single year’s fiscal balance.
We must think about Japan one hundred years and two hundred years from now.
And I believe that, for at least another 170 years, Japan must remain a country that leads the world alongside the United States.
In reality, the period is much, much longer.
It would not be an exaggeration to say forever.
We, who have inherited the past 2,600 years, also bear responsibility for the next 2,600 years.
Here, I believe, lies the decisive difference between Prime Minister Sanae Takaichi and the conventional view of the nation represented by the Ministry of Finance.
The present Takaichi administration has adopted a policy of “responsible proactive fiscal policy” and is pursuing growth investment and investment in crisis management as part of national strategy.
I regard Prime Minister Takaichi as a prime minister of such intelligence and decisiveness that it would not be an exaggeration to call her one of the greatest in Japan’s history.
That is because she can see Japan.
She can see the world.
Is it not because she is a politician who understands, not merely through statistical figures but almost instinctively, how enormous Japan’s inherent potential truly is?
That is precisely why she has put forward a proactive fiscal policy designed to strengthen the power of the nation and generate future wealth.
Proactive fiscal policy does not simply mean that the government spends money.
It is an investment that those of us alive today make in the future so that Japanese civilization can be passed on to the next age.
Semiconductors, AI, quantum technology, energy, space, biotechnology, and robotics are all necessary for that purpose.
Developing researchers, keeping factories in Japan, securing electricity, and protecting the national territory are all part of the same undertaking.
They are all necessary in order to pass the nation of Japan on to the next generation.
Is not this sense of time precisely what is most lacking in the Ministry of Finance and the Old Media?
This is not about this year’s budget.
Nor is it merely about ten years from now.
It is about a vision of the nation that asks how Japan will be preserved one hundred years, two hundred years, and far beyond that into the future.
Japan must not govern itself on the assumption that it will decline.
Japan must govern itself on the assumption that it will continue to be one of the greatest nations in the world.
The responsibility for that does not belong to the government alone.
It belongs to every Japanese person alive today.
The world is now at an enormous turning point.
AI is transforming industrial structures, semiconductors have become strategic goods that determine national security, and energy, robotics, space, biotechnology, and quantum technology will determine the wealth and security of nations.
In this age, the most dangerous policy is not merely to invest and fail.
It is to do nothing.
It is to fail to invest.
It is to lose researchers.
It is to lose factories.
It is to lose technology.
And then, after all of these things have been lost, to comment, “Why can Japanese companies no longer compete in the world?”
We must not repeat such foolishness any longer.
Kyle Chan’s words were spoken about the United States and China.
But it is Japan that should engrave this sentence at the very heart of its national strategy.
Only a country that invests on a large scale and on a sustained basis in both innovation and industrial capacity will gain a lasting advantage.
Then is not the answer perfectly clear?
Will Japan become a country that invests?
Or will it become a country that merely watches the United States and China invest while commenting from the sidelines on fiscal-balance figures?
The Ministry of Finance and the Old Media must answer this question.
Japan’s future will not be determined by whether this year’s accounts balance.
It will be determined by what we invest in today, how much we invest, and how long we continue that investment in order to create the next thirty years.
And we must not forget what lies beyond those thirty years.
We who have inherited the past 2,600 years bear responsibility for the next 2,600 years as well.
For the next 2,600 years too, Japan must continue to exist as one of the greatest nations in the world.
What, then, are we to preserve today, what are we to discard, and what are we to invest in for that purpose?
That is the true responsibility that the Japanese people must fulfill.
What is needed is neither taxation as the starting assumption nor indiscriminate spending cuts.
Cut what is unnecessary, and invest in what is necessary with the destiny of the nation at stake.
That is what governing a nation means.
A nation incapable of doing that can never achieve the rebirth of Japan as a technological power.