TOKYO (Reuters) – Japan could effectively block China from supplying drones to its government to protect sensitive information, six government and ruling party members familiar with the matter say as part of a broad-based effort to strengthen national security.

The main concerns, the people said, centered on information technology, supply chains, cybersecurity and intellectual property – concerns that have also increased outside of Japan.

But Japan needs to balance those fears – especially Beijing’s growing push to export sensitive technologies like commercial drones and security cameras – with deep economic dependence on China.

He also has to navigate increasingly turbulent waters between China and Japan’s closest ally, the United States, which is at odds with Beijing on many points, including technology.

“China is a big market and it’s important for Japan,” one of the top government officials said. “On the other hand, there are concerns that advanced technology and information may be leaked in China and diverted for military purposes.”

The Ministry of Defense has several hundred drones, some of which are manufactured by Chinese companies; the coast guard has about 30, and most of them are Chinese. Both said they were not using Chinese drones for security concerns. Other government entities also use such drones.

It is not known if all should be replaced, but the new drones, used for sensitive jobs such as criminal investigations, infrastructure work and emergency rescues, are expected to be protected from data leaks and go through emergency procedures. stricter control procedures, according to the revised policy.

The tightened rules, which are due to come into effect in April 2021, do not mention any country by name. But government and ruling party sources told Reuters they were created with China in mind.

The initiative includes new investment rules for foreigners adopted last year; Ruling party lawmakers are also preparing a comprehensive bill to promote economic security that will be unveiled this year.

Separately, Japan’s National Security Council set up a unit in April to examine how economic issues, such as advanced technologies, might affect national security.

BUSINESS OPPORTUNITY

Domestic drone makers expect to benefit from the changes, as they mean government departments will most likely make their drone purchases at home.

A Japanese drone maker, Tokyo Aircraft Instrument Co., Ltd., has developed a camera drone that can fly in strong winds, making it ideal for monitoring damage after a disaster – and the company is discussing potential applications with it. the government.

“The drone platform, flight control system, and radio communication equipment are all home-made, and this is our unique model based on our years of experience in avionics components,” said said Kazuya Sumida of the company’s drones division. “We plan to further improve the security of the drone’s information and communication functions.”

Granted, government sales represent only a small portion of the domestic drone market, which stood at 140.9 billion yen ($ 1.35 billion) in the fiscal year ended March 2020, in 51% increase from the previous year, according to the Impress Research institute. The market is expected to reach 642.7 billion yen in the fiscal year ended March 2026.

But the goal isn’t to boost local drone makers, say supporters of the measure – it’s to protect Japan.

“Japan will maintain diplomatic relations with China, but we will respond more carefully to sensitive technologies and information,” another senior government official said.

Analysts say the United States cannot completely cut off China either, as it would hurt the U.S. economy.

“I think the allied nations will discuss critical technologies, especially information and technologies that could give China a military advantage,” said Tsuneo Watanabe, senior researcher at the Sasakawa Peace Foundation.

Japan has already set aside around 300 billion yen to diversify its supply chains and reduce its dependence on China by repatriating production or locating further in Southeast Asia.