As Japan grows more ambitious as a regional leader, it has enhanced its diplomatic outreach accordingly. In late November, for example, reports emerged that Tokyo was interested in expanding into Central Asia. Prime Minister Fumio Kishida plans to visit the region in early 2024 for an inaugural summit with leaders of Kyrgyzstan, Uzbekistan, Kazakhstan, Tajikistan and Turkmenistan to establish greater economic ties. Japan is especially interested in Central Asia’s vast hydrocarbon resources, mineral wealth and crucial trade routes. Meanwhile, Tokyo has also boosted investment in Latin America and Africa, and it has intensified diplomatic efforts with traditional partners in Southeast Asia.

Japan’s behavior stands in stark contrast with that of China – a regional leader in its own right whose internal problems have forced the government to focus inward of late. While Beijing has engaged entire regions with its Belt and Road Initiative, Tokyo has strategically targeted specific countries and sectors – a strategy that appears to be as safe as it is promising. Japan’s engagement in Central Asia puts it in direct competition with Russia and China. For decades, Moscow has exerted economic influence and political pressure in the region, and it has had a substantial military presence there too. But its invasion of Ukraine has weakened its regional influence, opening the door for China to become a dominant player there. Beijing thus stepped in with its loan-based developmental agenda, wanting not only to shore up economic ties but also to create a buffer zone to manage its security challenges. But now that many of its BRI projects have stalled, Central Asian states have had to look to other, more reliable places for support. Japan’s interest, then, comes at a time when Central Asia is eager to accept it.

This is especially the case with regard to energy. The conflicts in Ukraine and the Middle East have undermined global energy security, and Japan is overwhelmingly dependent on energy imports. Diversification is thus a priority for Tokyo. To that end, Japan held its first ministerial economic and energy dialogue with Kyrgyzstan, Uzbekistan, Kazakhstan, Tajikistan and Turkmenistan on Sept. 26, after which they announced plans to implement a joint credit mechanism that will allow them to count the dissemination of greenhouse gas reduction technologies to other nations as reductions in their own emissions. Elsewhere, Japan is boosting its regional presence by investing in the mineral, industrial and energy sectors. Most of these projects are still in their initial phases; agreements over their extension are expected to be finalized at the C5 summit in 2024. The agenda of the summit will also likely include important Japanese goals for the region, including the creation of a Caspian Sea transport route that bypasses Russia and the introduction of renewable energy measures.

Whether Japan can become a dominant economic player in Central Asia depends on several factors. One is its own financial limitations. Japan’s economy contracted at an annual pace of 2.1 percent in July-September. In quarterly terms, the economy contracted by 0.5 percent. Private consumption shrank by an annualized 0.2 percent. Corporate investment decreased by 2.5 percent. With investment and demand weakening in other major economies, gross domestic product growth is expected to slow from 1.7 percent this year to 0.5 percent in 2024, prompting the government to prop up the country’s lagging economy. To boost one of the country’s main drivers, high tech, Tokyo has allocated $13 billion to support the chipmaking industry and another $2 billion for science and tech education.

Another factor is Japan’s defense modernization, on which it plans to spend $295 billion-$318 billion in the next five years. However, the Japanese government seems to have realized the opportunities its Central Asian outreach provides; one of the five pillars of the economic stimulus package introduced in October is investment, specifically investment in developing regions rich in natural resources. This new stimulus package is the most urgent priority for the government and, according to Kishida, reserve funds are available for its implementation. So while it appears as though Tokyo will continue to modernize its military even as it invests in Central Asia, it’s still a difficult act to balance.

A third factor is geography. So far, it’s unclear how Japan would bring in hydrocarbons and minerals without passing through Russia or China. One possibility is to transport natural gas through the Turkmenistan-Afghanistan-Pakistan-India pipeline and then import it through established sea routes. Given that Japan has recently deepened economic relations with both Pakistan and India, and has stabilized its presence in the Indo-Pacific, this solution seems viable. Still, the construction of the Turkmenistan-Afghanistan-Pakistan-India pipeline has been stalled for years. And now that the Taliban are in charge of Afghanistan again, there are doubts over whether the pipeline would be safe in any case. Transportation issues will be among the most crucial topics at the Japan-C5 summit.

Perhaps the biggest factor is China itself. Even though Central Asian nations consider Japan a more reliable investment partner, they will not be able to make the switch overnight. China is still the region’s largest trading partner and holds around 40 percent of the C5 nations’ state debt. And even though some BRI projects have stalled, many are finished or are in the process of being finished. Put simply, Japan is not about to replace China anytime soon, even if mutually beneficial cooperation is shaping up.

Tokyo is likely fine with that, at least for now, because Central Asia is just one of many places it is seeking to bolster its influence via investment. It has become a more active member of the U.S.-led Indo-Pacific alliance, which exists to counter Chinese regional hegemony, by boosting security ties with countries like the Philippines and Vietnam. As Southeast Asian nations, like their Central Asian counterparts, have begun to lose faith in China as an investment partner due to the increasing number of unfinished BRI projects and the rapidly piling debt, they too have begun to see Japan as a more reliable alternative. In terms of trade, the total value of Japanese imports and exports with the Association of Southeast Asian Nations grew to 11.6 percent in 2022, and 12 percent of Japan’s foreign direct investment has been sourced to ASEAN members, predominantly in their manufacturing sectors – unlike the rest of the world, which invests overwhelmingly in their coal, refined petroleum products and petrochemicals sectors. Japanese investment, then, is more desirable because it has helped to create stable and ample employment.

In Latin America, Japan has interests in lithium and other mineral resources, including those of Chile and Peru. These countries understand the dangers of being too dependent on a country like China, so Japanese investment would be a welcome addition to their industry, technology and infrastructure sectors. Large-scale trade and investment between Japan and Latin American countries are still in their early phase, but the interest is there, especially since Latin American countries are ideally positioned to benefit from heightened demand for critical minerals and metals. There are also prospects of cooperation in electric vehicle manufacturing, an increasingly popular area that Japan excels in. In October, Japan set a five-year investment target of more than $13 billion to invest in developing countries in the Global South, aiming at specifically deepening ties with resource-rich economies.

Importantly, Japanese influence lags far behind China’s in Central and Southeast Asia and in Latin America. Tokyo’s limitations being what they are, global economic expansion will be a slow, carefully planned process that focuses on the sectors in which Tokyo needs partners and can offer something China can’t: stable, long-lasting relationships that are financially profitable for both sides. However, Tokyo needs to remain careful not to divide its attention or make promises it can’t keep. The primary goal is mutual benefit, and right now, that seems safer and more feasible than regional domination.