Defense Cooperation: Japan’s parliament approved an Acquisition and Cross-Servicing Agreement with the Philippines to share defense supplies and logistics, including ammunition, airlifts, and base services, as China’s pressure grows. Rare Earth Supply Risk: China’s rare-earth export curbs are squeezing Japan-bound heavy rare earths used in magnet supply chains, with shipments of key materials like terbium and dysprosium effectively stalled since late 2025. Physical AI Push: Japan plans to mobilize about $65.1B (10.5T yen) in public-private investment for “physical AI” across 17 sectors by fiscal 2040, tying funding, regulation, and cybersecurity into one growth plan. Currency & Markets: The yen slid past 161 per dollar to a weakest level since July 2024, while officials warned they could act against excessive FX speculation. Earthquake Safety Upgrade: Tokyo’s revised quake plan targets fire deaths by expanding seismic breaker installation across emergency areas, though adoption and cost remain hurdles. Industrial Investment: Karnataka approved 55 industrial projects worth Rs 7,506 crore, including aerospace and electronics, with some Japanese firms among foreign investors. Energy Security Angle: Commentary highlights Australia’s push to stabilize Asia-Pacific energy supplies amid Hormuz disruption and rising AI-driven power demand.