US and Japan engage in commercial diplomacy to confront China, Tokyo ambassador says

US and Japan engage in commercial diplomacy to confront China, Tokyo ambassador says

New U.S. Ambassador to Japan Rahm Emanuel watches his meeting with Japanese Foreign Minister Yoshimasa Hayashi in Tokyo, Japan February 1, 2022. Behruz Mehri/Pool via REUTERS

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  • US conducts ‘commercial diplomacy’ focusing on chips
  • Tokyo and Washington will create a joint research and development center for chips
  • US company considers major investment in Japanese chips

TOKYO, August 1 (Reuters) – Chips, batteries and energy are key areas of cooperation between the US and Japan as allies seek to secure supply chains and counter China, Washington’s ambassador to Tokyo said.

Former Chicago Mayor Rahm Emanuel has focused on “commercial diplomacy” since becoming U.S. ambassador this year, pushing for business ties in areas that matter more broadly to economic security.

One US company is currently considering a “major potential investment” related to chips in Japan, which would mark the last collaboration between the countries in semiconductors, Emanuel said in an interview with Reuters.

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He declined to elaborate or give a timeline.

“Commercial diplomacy is a big part of the overall economic cooperation and coordination between the United States and Japan,” Emanuel said on Monday.

On Friday, the two countries agreed to set up a new joint research center for next-generation semiconductors.

Japan has said it will provide up to 92.9 billion yen ($700 million) to help US firm Western Digital Corp. (WDC.O) and partner Kioxia Holdings increase memory chip production at the Japanese plant. read more

Meanwhile, Tesla supplier (TsLA.O) Panasonic Holdings Corp. (6752.T) Last month, Kansas was selected as the location for a new battery plant. The deal came about, Emanuel said, after US President Joe Biden spoke with Panasonic executives while in Japan. read more

According to Emanuel, the cooperation began when China used its economic power to put pressure on other countries.

“There’s a pattern here: if they don’t like what you say politically, they will pressure you economically,” he said, referring to Japan’s experience more than a decade ago when Beijing capped export quotas for rare earths following a territorial dispute.

In a joint statement Friday, U.S. and Japanese ministers said they oppose “economic coercion,” although they did not name a specific country.

However, US Secretary of State Anthony Blinken said during a briefing that “the coercive and retaliatory economic practices of the People’s Republic of China are forcing countries to make choices that threaten their security, their intellectual property, their economic independence.” read more

China has repeatedly stated that it never uses economic coercion against any country and strongly opposes all forms of coercion, both political and diplomatic. He accused Washington of economic coercion in the name of national security.

Emanuel said that if the country is under pressure from China, the United States needs to be countered with “economic stimulus”, including using energy resources as a “strategic asset”.

Japan, the world’s largest buyer of LNG, is a growing market for US natural gas. Between 2018 and 2021, U.S. LNG imports to Japan more than doubled, according to the Japanese government. Advanced nuclear reactors, known as small modular reactors (SMRs), are another area of ​​cooperation.

Emanuel declined to say if U.S. House Speaker Nancy Pelosi, who began her tour of Asia on Monday, would visit Taiwan, a self-governing island claimed by Beijing. read more

Concerns about China’s tensions with Taiwan, which produces the vast majority of sub-10nm semiconductors used in smartphones, have prompted countries such as the US and Japan to increase investment in chip manufacturing.

Emanuel said more investment is also needed in training skilled workers to support chip production.

“For this, we both need to invest in more scientists, engineers and workers,” he said.

($1 = 132.5300 yen)

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Reporting by David Dolan and Yukiko Toyoda; Additional report by Yuki Obayashi; Editing by Alexander Smith

Our standards: Thomson Reuters Trust Principles.

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