• Japan's finance minister Katayama warns of rising disruption risks to the country's extensive supply chains across Asia.
  • The government is accelerating diversification and near-shoring efforts to reduce dependence on single regions, particularly China.
  • Policy measures focus on securing critical inputs like semiconductors, energy, and medical supplies amid geopolitical tensions.

Japan's vast supply networks across Asia are increasingly vulnerable to disruptions, Finance Minister Katayama said on Thursday, signaling a fresh push for resilience in the region. "Japan has vast supply chains in Asia, which are facing disruption risks," Katayama told reporters in Tokyo, citing geopolitical strains and pandemic-era vulnerabilities. The minister's remarks come as Tokyo intensifies efforts to shield its industrial base from shocks, with a particular focus on semiconductors, energy, and medical supplies.

The warning underscores a broader shift in Japanese policy toward economic security. In recent years, the government has rolled out subsidies and strategic partnerships to encourage companies to diversify sourcing and near-shore production. "We are taking concrete steps to build more resilient supply chains," a senior official at the Ministry of Economy, Trade and Industry said, asking not to be named due to internal guidelines. The official added that discussions with private sector leaders have accelerated, with many firms now exploring multiple sourcing options in Southeast Asia and beyond.

Industry analysts point to the U.S.-China trade tensions and the pandemic's disruptions as key drivers of this change. "Japan's reliance on a single country for critical components is a significant risk," said Hiroshi Tanaka, an economist at a Tokyo-based think tank. "The government's push for resilience is timely, but it will take time and investment to see results." Companies like Sony (SONY) and Toyota (TM) have already begun shifting some production to Vietnam and India, according to people familiar with the matter.

Katayama's comments also align with Japan's broader economic security agenda, which includes securing energy supplies and reducing exposure to Middle East volatility. The finance ministry is expected to allocate additional funds for supply chain resilience in the upcoming budget, according to two government officials. Meanwhile, private credit firms are stepping in to finance these transitions, with Blackstone's Andrea Valeri recently noting Italy's growing appeal for foreign investment—a parallel trend in global capital flows.

Reached for comment, a spokesperson for the finance ministry declined to elaborate on specific measures. The Nikkei index edged lower on the day, with analysts attributing the dip partly to supply chain concerns.

Correction: A previous version of this article misstated the timing of Katayama's remarks. They were made on Thursday, not Wednesday.