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This paper explores recent changes to Japan’s national security restrictions on the foreign acquisition of Japanese companies and other financial assets. Commentators have often incorrectly characterized these developments as driven by economic or diplomatic considerations. In fact, a different set of concerns has motivated Japan’s policy shift: national security. Due to the critical security relationship between Japan and the United States, Japanese macroeconomic policy often changes in response to American politics. Recently, changes in the Trump Administration’s approach to the Committee on Foreign Investment in the United States (CFIUS) have caused corresponding changes in how Japan regulates international business transactions. Even under the Biden administration, these changes are likely here to stay, and corporate leaders will have to learn how to navigate them.

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