Japan Fights Spies and Smugglers With New Security Rules

Japan is stepping up its defenses against spies, smugglers, and cyber attacks. Prime Minister Sanae Takaichi is leading the push to protect Japan's businesses, technology, and borders. Her government is launching a new security panel on June 29 that will check whether foreign investors could be a danger to the country. Recent cases of stolen secrets and smuggled computer chips have made many Japanese leaders feel the threat is growing fast.

Japan's new panel works a lot like a US government body called CFIUS, which stands for the Committee on Foreign Investment in the United States. Both panels look at deals where foreign companies or investors want to buy into local businesses. They check if those deals could put national security at risk. Before, Japan's reviews were mostly handled by just two ministries, but the new system will bring many parts of the government together.

The new rules also expand who gets screened. Foreign governments and state-run companies will face extra checks, even if they are investing in industries that were not considered sensitive before. The rules were updated as part of a change to Japan's Foreign Exchange and Foreign Trade Act. These updates give officials more power to look closely at risky deals before they happen.

Several recent events show why Japan feels the need to act. Japanese defence forces were found using USB drives infected with a virus linked to China. Reports also showed that AI chips made by the American company Nvidia were smuggled into China — with Japan used as a stop along the way. On top of that, drug gangs have been sending fentanyl, a dangerous opioid, across Japan's borders and into the United States.

Prime Minister Takaichi has been focused on these issues for years. Before becoming prime minister, she led her party's cybersecurity group and served as Japan's minister in charge of economic security. In a 2024 book, she wrote that China must not be forgotten when thinking about supply chains and information safety. She pointed out that China sends many students and researchers abroad, and that Chinese law can require its citizens to help the government collect information.

Still, China is not the only concern. Japan's National Police Agency has tracked suspicious cyber activity coming from many countries, including the United States and Russia. It can be hard to know exactly where an attack comes from because hackers can fake their location using something called a spoofed IP address. Officials say the threats are coming through digital channels more and more.

Japan's government has also started blocking some foreign business deals. In April, officials used a national security law to stop a South Korean company from buying a Japanese machine tool maker called Makino Milling Machine. It was only the second time Japan had ever used that law. A review of another deal — involving a Taiwanese company trying to buy a Japanese electronics firm — stretched on for seven months.

Smaller businesses are still at risk, even with the new rules. Small and medium-sized companies make up nearly all businesses in Japan, but many of them don't have the money or know-how to protect themselves. One exception is Make Start Co, a small manufacturer based in Aichi with about 100 employees. The company keeps most of its production in-house and gives workers company-owned smartphones to reduce the chance of leaks.

The head of Make Start, Kunihiro Sakoda, says small steps add up to real protection. He noted that breaches can happen when workers change jobs and take secret knowledge with them, or when social media posts accidentally reveal private information. Sakoda said he was glad to work with a cybersecurity specialist, because he might have put off the effort if he had been on his own. Experts say the government is doing a good job raising awareness among business owners across Japan.