"It's important for us to revive Tokyo as a finance center," said Seiji Kihara, a member of the Liberal Democratic Party's economic growth strategy group that outlined the plan. The recommendations include relaxing banking regulations and encouraging greater focus on environmental, social and governance factors.

Kihara specifically noted the situation in Hong Kong, where national security legislation is set to be imposed by Beijing. This came a day after Prime Minister Shinzo Abe said Japan will continue to welcome "foreign talent with specialized and technical abilities, including from Hong Kong."

Promoting the capital as an international financial hub was a plank in the LDP platform in last year's upper house election. The Chinese security legislation is expected by many to reduce the freedoms that made Hong Kong attractive to global banking groups, potentially creating an opening that Japan can capitalize on.

But "if Japan wants to make use of financial talent from Hong Kong, it will need to build a financial system that is closely tied to mainland China's," said Minoru Nogimori of the Japan Research Institute.

"Hong Kong developed as a financial center because it was a gateway to the closed-off Chinese market," he said. "If Japan can't replicate the benefits of that ideal position, then people won't come."

One option, Nogimori suggested, is a stock market link similar to the Shanghai-Hong Kong Stock Connect program. The program, launched in 2014, allows investors to trade shares in each market through local brokers and clearing houses.

David Atkinson, CEO of Konishi Decorative Arts and Crafts and a former Goldman Sachs banking analyst, said that Japan has been striving to become an international financial center from three decades ago when he first arrived in the country. "Building the infrastructure alone will not bring talent from abroad," he told Nikkei.

There are two issues, he said. One is that salary levels are low compared to Hong Kong and Singapore. "Japan's gross domestic product has hardly grown in the last 30 years," he said, pointing out that corporate productivity is low.

Secondly, he said that the ratio of small and medium sized companies is too high, due to the protective nature of Japan's policies. "Japan must realize that to attract an international finance center it must first change its industry structure," Atkinson said.

Nogimori also pointed to competition from Singapore, which beats Tokyo as a currency market.

"Reform of the domestic stock market will be needed to win out over Singapore," he said. This includes a strategy to encourage listings by foreign companies, which Nogimori suggested are turned off by a screening process that is overly strict and detailed.

Chief Cabinet Secretary Yoshihide Suga said Friday that "we will continue to consider what we can do" to bring in highly skilled workers from Hong Kong and elsewhere.

"We will coordinate with relevant agencies to actively promote" bringing in foreign talent "from a medium- to long-term perspective," said Foreign Minister Toshimitsu Motegi.

The LDP proposal also recommends more firmly establishing new work styles such as telecommuting, in light of their broader use during the coronavirus outbreak, and touches on digital topics including fifth-generation wireless technology.

A full version, to be incorporated into the government's economic and fiscal management and reform policies due out in July, will be released this month.

A poll last month, when the national security legislation was announced, by Hong Kong newspaper Ming Pao found that 37.2% of respondents were considering moving abroad. The U.K. and Taiwan, which have particularly deep ties with the territory, have offered support to would-be emigrants.