Japan’s middle power moment  

Kashima Refinery in Ibaraki Prefecture, Japan (Photo: Wiki Commons; Author: Kaz Ish)

Japan today, like most countries, is navigating a world that feels increasingly unstable – though you would not necessarily know it from the mood in Tokyo. Despite mounting geopolitical shocks, including the war in Iran and intensifying rivalry with China, Japan appears to be weathering the international storm with an enviable calm – at least on the surface. This is not accidental. Japan’s response to recent global upheaval reflects both structural resilience and a deliberate strategic posture – one that is pragmatic in the short term but increasingly hedged for a more uncertain future.

Take the current global energy crisis. Japan is a resource-poor country with a large economy that imports more than 90 percent of its crude oil from the Middle East. This makes it particularly vulnerable to the closure of the Strait of Hormuz. However, Japan is also in a more fortunate position than many, maintaining one of the world’s largest strategic oil reserves – 254 days as of the end of 2025 – enough to cushion shocks for months. Combined with relatively stable ties with key suppliers, such as Iran (which in March stated it would allow Japanese ships through the Strait), Tokyo’s stockpiling and careful relationship management have bought it time and space to address the potential longer-term implications of the war.

Anxiety is more palpable in the realm of security – and more specifically, in the durability of the United States alliance. In the short term, the strategy is unmistakable: double down. There is no viable substitute for the US security guarantee, and Japanese policymakers are not pretending otherwise. Prime Minister Takaichi’s March summit with Donald Trump reflects this pragmatism. By most accounts, the visit was a success – not because it produced major strategic breakthroughs, but because it avoided negative outcomes (polls showed Takaichi’s approval topping 70 percent after the visit). Japan was not pressured into deeper involvement in Iran, and Takaichi maintained a positive relationship with an unpredictable partner.

President Donald Trump and Japanese Prime Minister Sanae Takaichi watch the World Series before a bilateral meeting in October 2025 (Photo: Wiki Commons; Author: The White House)

Yet there is a growing recognition that reliance on the United States, while necessary, is increasingly risky. The concern is not that the alliance will disappear tomorrow, but that its reliability over time is uncertain. As a result, efforts to build greater strategic autonomy are accelerating, but quietly. The goal is not to replace the United States but to reduce vulnerability at the margins. Investments in independent intelligence capabilities, long-range strike options, and a revitalised defence industrial base all point in this direction. These are not headline-grabbing changes, but they matter.

They also blur the line between security and economics. Japan’s push to expand its defence industry is as much about growth as it is about autonomy. Eased export controls on defence sales, combined with government support, are opening new opportunities, with potential deals – such as the sale of Mogami-class frigates to partners like Australia – seen as tests of Japan’s ability to compete in global markets.

Japan is scheduled to deliver the first three Mogami-class frigates (pictured) to Australia in 2029 (Photo: Wiki Commons; Japan Ministry of Defence)

Relationship diversification is another way to build greater autonomy. Tokyo is investing heavily in regional partnerships, from Australia to emerging groupings like the Indo-Pacific 4 (IP4). Countries like Australia and even New Zealand are increasingly central to this effort – not as substitutes for the United States, but as complements to it. In a more contested region, resilience comes from networks of partnerships, not formal alliances alone.

Economic policy is moving in a similar direction. If the post–Cold War era was defined by liberalisation, the current moment is characterised by fragmentation. Tariffs and trade barriers are no longer temporary disruptions; they are structural features of the global economy. Japan’s response has been to double down on trade architecture. The expansion of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – potentially to include South Korea – is one avenue. Building more trade links with Europe is another. Quieter mechanisms like the Regional Comprehensive Economic Partnership (RCEP) are proving their worth in facilitating trade flows between Japan, China, and South Korea, where no free trade agreements exist.

Japan's Prime Minister Sanae Takaichi and Korean President Lee Jae Myung visit Hōryū-ji temple in Nara, Japan (Photo: Wiki Commons; Author: Cabinet Public Affairs Office, Japan)

If Japan’s economic and security strategies are evolving, so too are its regional relationships. Ties with South Korea are warming, driven less by sentiment than by shared strategic concerns. China’s growing assertiveness, combined with North Korea’s growing missile threat, has created a convergence of interests between Tokyo and Seoul. With China itself, however, relations are at their lowest point in years following Takaichi’s remarks on Taiwan in December and subsequent retaliation by China, including trade restrictions and cancelling flights. Diplomatic channels have frozen, people-to-people exchanges have dwindled, and trust is in short supply. There is some hope that upcoming multilateral meetings – like APEC – might provide a face-saving off-ramp for both countries, but it seems unlikely that there will be a rapid thaw in relations.

For countries like New Zealand, the signals are clear. Japan is looking outward – seeking partners to build resilience and position itself for a more contested world. There is genuine momentum in the bilateral relationship, underpinned by shared interests in regional stability and economic openness. The opportunity now is to translate that goodwill into deeper, more practical cooperation.

 The Foundation's Asia in Focus initiative publishes expert insights and analysis on issues across Asia, as well as New Zealand’s evolving relationship with the region.