Sanae Takashi's Economic Ambitions: Invest 1 trillion yen over five years to develop AI, and allocate 55 billion to rescue the anime industry from deficits

Japanese Prime Minister Sanae Takaichi announced on December 19th that over the next five years, 1 trillion yen will be invested in developing domestically produced AI, and 55 billion yen will be allocated to support overseas development of anime and gaming, aiming to boost content industry exports to 20 trillion yen. This move is a response to Japan’s Ministry of Economy, Trade and Industry’s forecast that digital deficits could reach 45 trillion yen by 2035.

Sanae Takaichi’s Policy Shift Focuses on Solving the 45 Trillion Yen Digital Deficit Crisis

(Source: Japan Ministry of Economy, Trade and Industry Digital Economy Report)

Sanae Takaichi’s aggressive investment strategy stems from a warning report by Japan’s Ministry of Economy, Trade and Industry. The report indicates that Japan is facing a severe “digital deficit crisis,” due to over-reliance on overseas digital service platforms and the impact of generative AI technology. It is estimated that by 2035, Japan’s broad digital deficit could reach as high as 45 trillion yen. This figure would not only swallow trade surpluses but could also threaten the competitiveness of the nation’s industries.

The sources of digital deficit are diverse, including cloud service fees paid to U.S. tech giants, software licensing costs, social media advertising outflows, and subscription fees for generative AI services. As AI tools like ChatGPT and Midjourney become widespread, Japanese companies and individuals are paying rapidly increasing fees to overseas AI service providers. Without developing domestic alternatives, this trend will continue to worsen.

In the face of potential collapse of the system integration (SI) market due to the AI revolution, Mizuho Bank economist Daisuke Tohkama analyzes that defense is no longer practical; Japan must shift to offense. Data shows that in 2023, Japan’s content industry market size has surpassed semiconductor exports, with impressive performance in copyright licensing and gaming services, becoming a key pillar to fill the international balance of payments gap. This is the strategic logic behind Takaichi’s simultaneous focus on AI and content industries: replacing defense with offense.

Three Major Strategic Goals for 1 Trillion Yen AI Investment Over Five Years

Sanae Takaichi emphasized at the AI Strategy Headquarters meeting that the goal is to make Japan the most AI-friendly country in the world for development and use. The 1 trillion yen investment is substantial, but still falls short compared to the AI investments of the U.S. and China. The key lies in how to precisely utilize this fund to achieve a leapfrog advantage.

The government announced that over the next five years, it will support private enterprises in developing domestic AI models and building computing resources. This strategy avoids direct competition with U.S. tech giants in general AI and instead focuses on Japan’s advantageous vertical fields, such as manufacturing AI, medical AI, and content generation AI. Building computing infrastructure is equally critical; the revival of Japan’s semiconductor industry provides a foundation for domestic AI chip development.

This “private-led, government-supported” model differs from China’s state-led approach and from the fully market-driven U.S. model, reflecting Japan’s unique industrial policy characteristics. The government provides funding and policy support, but the specific technical routes and business models are decided by enterprises. This balance theoretically allows for both innovation vitality and strategic direction.

Three Main Directions of Sanae Takaichi’s AI Investment

Domestic AI Model Development: Support private enterprises in developing Japanese-optimized, vertical-specific local AI models

Computing Resources Construction: Invest in AI chips, data centers, and cloud infrastructure to reduce dependence on overseas platforms

Industry-Academia-Research Collaboration: Promote cooperation among universities, research institutions, and enterprises to accelerate AI technology commercialization

But is 1 trillion yen enough? The AI R&D budget of a single U.S. tech giant can reach hundreds of billions of dollars, and China’s government support for AI industry has no upper limit. Japan’s funding scale is relatively limited, and it must rely on precise investment and efficiency advantages to bridge the gap.

Can 55 Billion Yen Support for Anime and Gaming Solve the Low-Wage Issue at the Grassroots?

(Source: Human Media)

In early December, Sanae Takaichi announced that over 55 billion yen in subsidies will be used to strengthen overseas development support for content creators in music, anime, and gaming. This figure is a significant increase from the previous 25.2 billion yen, indicating a shift in government attitude. However, this budget remains below South Korea’s 76.2 billion yen and far below China’s 123.8 billion yen and the U.S.’s 617.6 billion yen.

A more critical issue is how the funds are allocated. According to a Human Media survey, Japan’s content industry market size in 2024 has already exceeded 15 trillion yen, with overseas sales of anime growing by 26%. Anime and gaming industries account for over 90%, while live-action and publishing sectors are very small. This structure shows Japan’s content industry strengths are concentrated in anime and gaming but also reveals a lack of diversity.

However, while the government loudly announces hundreds of billions in subsidies, industry voices differ. According to a 2023 survey by the Japan Animation Creators Association (JANICA), animation workers face long working hours and few vacations, with average annual salaries for newcomers aged 20-24 at only about 1.966 million yen (roughly NT$400,000), and for workers aged 25-30 at 2.928 million yen, both below the national median salary for ages 20-29 of 3.3 million yen.

Worse still, the “Invoice System” that came into effect in October 2023 forces creators with annual revenue under 10 million yen to become taxable entities and absorb consumption tax themselves, or face difficulties in securing projects. This not only effectively reduces income but also raises concerns about talent drain and industry decline. The community calls for the government to pay more attention to grassroots working conditions rather than just overseas expansion.

Feasibility and Challenges of the 20 Trillion Yen Target

Takaichi’s ambitious goal of 20 trillion yen in overseas sales. In 2024, Japan’s overall content industry scale is only 15 trillion yen, with limited overseas revenue share. Achieving 20 trillion yen in overseas sales would require several times growth in overseas income in the coming years. Such growth demands not only capital investment but also fundamental reforms in industry structure.

Whether it’s the 1 trillion yen AI investment or the 55 billion yen content industry subsidies, Japan is trying to turn the tide through crisis management. Without improving industry quality, solving grassroots talent low wages and tax issues, this gamble may be difficult to realize the grand vision solely through budget figures.