Is Japan ready to face the Taiwan crisis? The scenario warns of shortages of food and fuel

TOKYO – Not a day goes by without Taiwan news. US military leaders warned of possible Taiwan Strait contingencies. US President Joe Biden and Japanese Prime Minister Yoshihide Suga underlined the importance of peace and stability across the strait during their meeting Friday.

But what exactly can we hope for if such a Taiwan crisis occurs? How will the Japanese economy and society be affected?

One scenario is that commercial ships cannot freely navigate the East China Sea and South China Sea, because American and Chinese warships face off in the waters. What would happen if this continued for, say, six months? Supply chains for basic necessities including fuel and food will be disrupted, and the Japanese economy faces chaos.

Resource-poor Japan currently has about 250 days’ worth of petroleum reserves – the result of several important lessons learned from the past two oil crises. The problem is the supply of liquefied natural gas, which demand soared after Japan’s nuclear power plants shut down following the Fukushima disaster in 2011.

LNG now accounts for about 40% of Japan’s electricity generation. But LNG needs to be stored at very low temperatures and is not suitable for long storage.

In addition, Japan relies on imports of LNG reaching its shores mainly via the South China Sea – from Australia, Southeast Asia and the Middle East.

If Japan quickly changes its LNG delivery route, Japan might be able to overcome the emergency. But the track record of the country struggling for face masks after the coronavirus outbreak does not give it a reputation for swift decision-making. In addition, if the Taiwan crisis erupts, global logistics is likely to experience chaos, leaving little room for a change in major shipping routes.

In January, in the middle of a bitter winter, Japan was on the verge of a widespread blackout as its LNG stockpiles nearly dried up. Countries cannot buy LNG quickly on the spot market.

Apart from fuel, another major problem is the supply of food. Japanese food self-sufficiency is below 40%. Despite having a two to three month supply of rice and wheat, panic buying can put serious pressure on supplies.

In the manufacturing sector, companies have diversified their supply chains from China to Southeast Asia. But if the South China Sea becomes a barrel of gunpowder, that supply chain will still be choked, leaving companies nowhere to operate.

Now is the time for governments and companies to seriously consider ways to secure supplies in such a crisis.

For example, if Japan diversifies its trade with countries on different sea lanes, such as Canada, how much will it cost?

Toshifumi Kokubun, a professor at the Tama Graduate School of Business in Tokyo who also serves as director of the Center for Rule-making Strategies (CRS), a Japanese think tank, said the country must adopt a new way of thinking and reacting.

Relying on facts and evidence to form a strategy is not enough, says Kokubun. “It has to look at facts, speculation and even rumors and learn to make decisions about an unclear future,” he said.

He took advantage of the work CRS was doing after a fire hit Japanese chipmaker Renesas Electronics, exacerbating a global shortage of computer chips. Cyber ​​attacks are not yet suspected, but a team of CRS cybersecurity experts are investigating whether it is technically possible that the cyberattack triggered the fire.

The team found that it was, in fact, possible to manipulate an electric current to cause it to overheat which could then start a fire. What some considered a conspiracy theory, the CRS proved possible and took action to alert the company of its findings.

Kokubun uses this analogy to highlight that if government and corporate intelligence divisions share information about and investigate what some may find impossible, “they may see things they have not seen before.”

In Japan, there is a tendency not to want to shake the status quo and hope that things will continue as usual, rather than face a potential crisis head-on. Worst scenario assumptions will also be expensive and result in various projects becoming less feasible.

The oil crisis and food insecurity were once hotly debated issues in Japan. But after the end of the Cold War, the country entered a peaceful and prosperous enough era in which supplies became so constant and abundant that people were no longer aware of their own vulnerabilities.

Japan is fortunate in having a less dangerous neighbor while offering its services as a major manufacturing center and a large market for Japanese companies.

Those carefree days may be over. Living with inefficiencies and limited supplies will become the new normal as we enter the new Cold War between the US and China.

Japan is lagging behind the curve in managing the Fukushima nuclear disaster and the specter of the coronavirus. Now he has the opportunity not to repeat the same mistakes.