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The EU Japan Centre is releasing a weekly press review covering Japan's economic and business matters.
▶ UK defense budget woes delay fighter jet contract with Japan, Italy
24 Jan, 2026
Photo Source: Tomohiro Ebuchi/Nikkei
Japan, Italy, and the U.K. are facing delays in finalizing a contract for the joint development of a next-generation fighter jet under the Global Combat Air Programme (GCAP). The contract, originally expected by the end of 2025, has been stalled due to uncertainty over the U.K.'s defense spending, which is under pressure amid rising security concerns and a funding shortfall. The U.K. faces difficulties in meeting NATO defense spending targets and has delayed its defense investment plan, impacting the project’s timeline. This could push back the 2035 deployment date for the sixth-generation stealth fighter, which is intended to replace current aircraft like Japan's F-2 and the U.K.'s Eurofighter Typhoon. Development may continue under existing contracts between the countries and their respective defense companies.
Nikkei Asia: https://asia.nikkei.com/politics/defense/uk-defense-budget-woes-delay-fighter-jet-contract-with-japan-italy
▶ Japan aiming for first strategy to enhance defense industry
24 Jan, 2026
Photo Source: Asahi
The Japanese government is working on a policy to strengthen the domestic defense industry by the end of fiscal 2026. The Takaichi administration's "defense industry strategy" aims to position defense as a key driver of economic growth. The strategy will guide both domestic and international initiatives and may include nationalizing production facilities for items like ordnance, outsourcing operations to private companies, and ensuring equipment manufacturing for emergencies. The strategy is being developed alongside revisions to Japan's security policies and is expected to be part of the country's growth strategy, set to be finalized this summer.
Asahi: https://www.asahi.com/ajw/articles/16306762
▶ Japan PM aims for 2-year break on food tax within FY 2026
25 Jan, 2026
Photo Source: Mainichi
Prime Minister Sanae Takaichi plans to suspend the 8% consumption tax on food and beverages for two years starting in April 2026, until a refundable tax credit system is introduced. This proposal is a key issue in the February 8 election. The Centrist Reform Alliance, led by Yoshihiko Noda, advocates for completely abolishing the food tax, estimating a ¥10 trillion cost. Noda aims to implement this by fall 2026 without deficit financing. However, Yuichiro Tamaki of the Democratic Party for the People disagreed with the 2026 timeline, calling for further discussion on its impact.
Mainichi: https://mainichi.jp/english/articles/20260125/p2g/00m/0na/022000c
▶ Japan, US eye synthetic diamonds to kick off $550bn investment plan
29 Jan, 2026
Image: Nikkei
Japanese companies are considering their first investments in the U.S. as part of a $550 billion commitment made last year in exchange for lower tariffs. Potential projects include synthetic diamond production and power infrastructure by Hitachi. Element Six Holdings, owned by De Beers, is exploring a $500 million synthetic diamond manufacturing facility with involvement from Japanese suppliers. Synthetic diamonds are crucial for industries like semiconductors, and China’s export curbs have heightened concerns over supply. Hitachi may also invest in power transmission and distribution projects, such as transformers for data centers. Japan aims to announce its first project by spring 2026.
▶ Japan and Belgium celebrate 160 years of diplomatic ties
28 Jan, 2026
Photo Source: JIJI
Japan and Belgium have strengthened their economic ties over 160 years, with around 250 Japanese companies, including Toyota and Daikin, operating in Belgium. This partnership spans trade, investment, and technology, contributing to economic growth in both nations. As part of the 160th anniversary celebrations, the two countries will continue to explore new cooperation opportunities, particularly in green technology and advanced manufacturing. The upcoming official visit by the Japanese emperor and empress is expected to further boost these economic and cultural ties.
Japan times: https://www.japantimes.co.jp/news/2026/01/28/japan/japan-belgium-160/
▶ Japan becomes 1st country to join Trump's Genesis Mission innovation plan
28 Jan, 2026
Photo Source: Dai Kuwamura/Nikkei
Japan has become the first international partner in the U.S. "Genesis Mission" project, launched by the Trump administration in 2025 to speed up scientific research using artificial intelligence (AI). The project aims to build an AI platform to advance fields like biotechnology, nuclear fusion, and quantum computing, with both countries sharing supercomputers and scientific data. Japan’s involvement gives it access to U.S. high-performance computing resources. Collaborators include Japan's Riken institute, Fujitsu, and Nvidia, all working on a successor to Japan's Fugaku supercomputer. While the Genesis Mission focuses on national security and economic interests, critics point out the Trump administration's cuts to broader scientific funding.
Nikkei Asia: https://asia.nikkei.com/business/science/japan-becomes-1st-country-to-join-trump-s-genesis-mission-innovation-plan
▶ Japan Gas Leader Says Hard to Give Up Russian LNG
30 Jan, 2026
Photo Source: JIJI
Japan finds it difficult to stop importing Russian LNG despite U.S. and European sanctions, as Russian LNG—mainly from the Sakhalin-2 project—offers an economic advantage, accounting for about 10% of Japan’s LNG imports. While the U.S. has urged a halt, exemptions have allowed continued imports. Japan Gas Association chief Takashi Uchida emphasized the need to ensure procurement in coordination with the government, and noted that alternative sources like Alaska LNG or synthetic methane face cost and production challenges before they can replace Russian LNG.
JIJI: https://jen.jiji.com/jc/eng?g=ind&k=2026012900534
▶ India-Japan partnership on upswing amid tariff war: business lobby official
30 Jan, 2026
Photo Source: Ken Kobayashi/Nikkei
Rising global tariff tensions are strengthening India–Japan ties, with both countries deepening cooperation in areas like AI, semiconductors, critical materials, supply chains, and defense. Business and government leaders say Japan’s interest in India is growing rapidly, especially as companies look to diversify beyond China. Bengaluru has emerged as a key hub, attracting Japanese firms such as Renesas and Tokyo Electron, which are expanding R&D and development operations. Overall, India is increasingly seen as a prime destination for Japanese investment, with hopes of evolving from a services-led economy to a manufacturing-driven one.
Nikkei Asia: https://asia.nikkei.com/economy/india-japan-partnership-on-upswing-amid-tariff-war-business-lobby-official
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▶ Google invests in Japan unicorn Sakana AI, forms strategic partnership
24 Jan, 2026
Photo Source: Nikkei
Sakana AI, a Japanese AI developer, announced a financial investment and strategic partnership with Google to enhance its use of Google's large language models (LLMs) in product development. The partnership will allow Sakana AI to leverage Google’s Gemini generative AI model while still using models from other providers like OpenAI. Google’s backing aims to expand its presence in the Japanese market and promote its cloud and AI services. Sakana AI, valued at $2.25 billion, plans to develop its own LLM alongside products using Google’s models. The company also has ties with Nvidia and is seeking more global partnerships.
▶ KDDI Opens AI Data Center at Former Sharp Plant in Osaka Prefecture; Facility Will Provide Google’s Gemini AI Model for Domestic Users
24 Jan, 2026
Photo Source: Yomiuri
KDDI Corp. has launched an AI data center at the site of the former Sharp Sakai plant in Sakai, Osaka Prefecture. The facility, which utilizes Nvidia’s advanced semiconductors for AI training, will offer Google’s Gemini generative AI model to domestic users. The four-story center has a power capacity of 48 megawatts, equivalent to 12,000 households' consumption, and processes data up to four times faster than traditional centers. It also uses KDDI's dedicated telecom lines to ensure secure handling of sensitive data, like medical records. The center aims to support Japan's digital society through AI and telecommunications.
Yomiuri: https://japannews.yomiuri.co.jp/business/companies/20260124-306063/
▶ Next-generation obesity drug from Chugai and Roche aims to stop rebounds
26 Jan, 2026
Photo Source: Chugai Pharmaceutical
Chugai Pharmaceutical, a Roche subsidiary, plans to seek approval by 2028 for a new obesity drug, GYM329, currently in clinical trials. GYM329 aims to prevent weight regain after treatment by preserving muscle mass, which helps maintain energy usage. It is expected to be used alongside existing GLP-1 drugs, like Novo Nordisk's Wegovy and Eli Lilly's Zepbound, which promote weight loss but may cause muscle loss. The global obesity drug market is growing rapidly, with projections reaching $95 billion by 2030. Meanwhile, Eli Lilly is also developing a new multi-hormone obesity drug and an oral version of orforglipron, for which Chugai contributed to research.
▶ JERA Announces First LNG Cargo from Barossa Gas Field in Australia
27 Jan, 2026
Photo Source: JERA
JERA Co., Japan’s largest power generation company, announced the first LNG shipment from the Barossa Gas Project in Australia, in which it holds a 12.5% interest. The project, which began operations in September 2025, will process gas at the Darwin LNG plant, replacing supply from the Bayu-Undan field. JERA will offtake approximately 425,000 tonnes of LNG annually. The milestone strengthens JERA’s position in the LNG value chain and supports its role in ensuring energy stability in Asia. With rising regional energy demand, Australia remains a key LNG supplier for the region. JERA plans to continue expanding its LNG portfolio to contribute to global energy solutions, focusing on both energy transition and affordable energy supply.
JERA: https://www.jera.co.jp/en/news/information/20260127_2336
▶ Amazon’s Cloud Division to Offer Up to ¥900 Mil. in Support for Japanese Companies Developing AI for Robots
27 Jan, 2026
Photo Source: Reuters
Amazon Web Services (AWS) Japan will offer up to $6 million (¥900 million) in support for Japanese companies developing AI for robots. Selected companies will receive a 50% discount on AWS cloud usage fees and specialized staff assistance. The initiative targets startups and other companies, with plans to support several dozen firms. Applications are open until February 13, with intensive support running from March to June. Despite Japan’s strong industrial robotics capabilities, it lags behind the U.S. and China in developing "physical AI" for robotics.
Yomiuri: https://japannews.yomiuri.co.jp/business/companies/20260127-307121/
▶Japan ethylene makers consolidate as China glut forces shutdowns
27 Jan, 2026
Photo Source: Nikkei
Mitsubishi Chemical and Asahi Kasei are set to shut down their jointly operated ethylene production facility at the Mizushima complex in Okayama Prefecture by 2030, consolidating production at Mitsui Chemicals' facility in Osaka. The Mizushima plant, with an annual capacity of 496,000 tons, represents nearly 10% of Japan's ethylene output. Rising competition from China's oversupply has led to a decline in Japan's ethylene production, with operating rates falling below profitability levels for over three years. The closure is part of broader industry restructuring, with Japan's overall ethylene capacity expected to drop by 30% by 2030. The three companies involved are also exploring new technologies and decarbonization efforts, supported by government subsidies.
Nikkei Asia: https://asia.nikkei.com/business/markets/commodities/japan-ethylene-makers-consolidate-as-china-glut-forces-shutdowns
▶ NYK Invests in XFuel to Revolutionize Marine Fuel Efficiency
28 Jan, 2026
Image: NYK
On November 28, 2025, NYK invested in XFuel Limited, a European company specializing in low-carbon fuel technology. XFuel has developed a proprietary process called Chemical Liquid Refining (CLR), which efficiently converts waste-derived hydrocarbons into high-purity, low-carbon fuels for marine applications. This technology offers a viable decarbonization solution without requiring modifications to existing engines or infrastructure. Through its partnership with XFuel, NYK aims to supply waste fuel sludge from its vessels, purchase low-carbon fuel, and collaborate on sustainability initiatives, advancing the shipping industry's environmental goals.
NYK: https://www.nyk.com/english/news/2026/20260128.html
▶Test Deployment of Industrial Robots Powered by Maxell’s All‑Solid‑State Battery Power Modules Begins at Kyocera’s Kagoshima Sendai Plant
28 Jan, 2026
Photo Source: Kyocera
Kyocera and Maxell have started test operations at Kyocera's Kagoshima Sendai Plant, using Maxell’s all-solid-state PSB401010H batteries in industrial robots. These batteries offer high reliability and heat resistance, making them ideal for harsh manufacturing environments. Unlike traditional primary batteries, they have a 10+ year lifespan, reducing replacements and waste. Housed in ceramic packages made by Kyocera, the batteries offer enhanced durability. This collaboration not only minimizes environmental impact but also opens up new industrial applications, showcasing Maxell’s commitment to sustainability and innovation in battery technology.
Maxell: https://ssl4.eir-parts.net/doc/6810/ir_material4/272181/00.pdf
▶ Toyota tops global auto sales for 6th straight year in 2025
29 Jan, 2026
Photo Source: Mainichi
Toyota Motor Corp. retained its position as the world’s top-selling automaker in 2025 for a sixth consecutive year, driven by strong global demand for hybrid vehicles, especially in North America. Group sales rose 4.6% to a record 11.32 million vehicles, far outpacing Volkswagen, despite higher U.S. tariffs and tougher competition in China. Hybrids were a key growth engine, while production also increased. Across Japan’s major automakers, overall sales edged up slightly, but several companies—including Honda, Nissan, and U.S.-focused brands—struggled due to tariffs and intensified competition, particularly in China.
Mainichi: https://mainichi.jp/english/articles/20260129/p2g/00m/0bu/024000c
▶ Japan ship industry players team up to fend off China shipbuilders
30 Jan, 2026
Photo Source: Nikkei
Japanese shipbroker Somec, a subsidiary of Orix, will form a joint venture with three Japanese shipping and shipbuilding companies to jointly own and order vessels. The venture will order three bulk carriers from domestic shipyards, with delivery expected by 2030, aiming to strengthen Japan’s shipbuilding industry amid strong competition from China. Orix plans to expand its presence in shipping and asset management through this initiative, which is Japan’s first joint venture spanning shipowners, shipyards, and a brokerage firm.
Nikkei Asia: https://asia.nikkei.com/business/transportation/japan-ship-industry-players-team-up-to-fend-off-china-shipbuilders
▶ HondaJet flies into 2nd decade with profitability on horizon
30 Jan, 2026
Photo Source: Maho Obata/Nikkei
Honda’s light business jet, the HondaJet, marks its 10th anniversary as Honda Aircraft aims to achieve profitability by 2030. After years of losses driven by low pricing to gain market share, the company has raised prices and is developing the next-generation HondaJet Echelon, set to launch in 2028. The Echelon promises industry-leading fuel efficiency, longer range, and strong early demand, with hundreds of buyer commitments already received. Honda is also expanding certified pre-owned sales and focusing on sustainable aviation fuel to meet environmental regulations. If production, maintenance capacity, and cost challenges are managed, Honda sees aviation becoming its fourth core business pillar.
Published: January 2026
The EU-Japan Centre currently produces 5 newsletters :
Joint venture established in 1987 by the European Commission (DG GROW) and the Japanese Government (METI) for promoting all forms of industrial, trade and investment cooperation between the EU and Japan.
