World New Prime Minister Fumio Kishida Promises a 'New Capitalism' for Japan. Will It Succeed?
Japan's Kishida, Biden agree to cooperate on China, N Korea
TOKYO (AP) — Japan's new Prime Minister Fumio Kishida held his first talks as Japanese leader with President Joe Biden and confirmed they will work to strengthen their alliance and cooperate in regional security in the face of growing challenges from China and North Korea. Kishida, who was elected by Parliament and sworn in Monday, told reporters that Biden reassured him of the U.S. commitment to defend the Japanese-controlled East China Sea island Senkaku, which China also claims and has escalated coast guard activity in the area.Biden provided “a strong statement about U.S. commitment for the defense of Japan, including ...
In hison becoming Japan’s 100th prime minister, Fumio Kishida doubled down on campaign promises to redistribute wealth and shrink inequality. “If you want to go fast, go alone; if you want to go far, go together,” Kishida told lawmakers on Oct. 8, quoting a proverb of .
But the “new form of Japanese capitalism” advocated by the softly spoken Kishida—a former foreign minister with a reputation as a consensus builder—spooked Tokyo investors wary of higher taxes and prompted. In response, the 64-year-old chosen to lead the ruling Liberal Democratic Party (LDP), following last month’s , insisted that he wasn’t planning on anytime soon.
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Ultimately, it matters little. Disarray in opposition ranks means the LDP is expected to stroll to victory in snap elections Kishida called for Oct. 31. But what his “new” capitalism actually entails is still a matter of debate. Analysts agree that, at the least, it’s a repudiation of the “Abenomics” of Japan’s longest-serving prime minister, Shinzo Abe, as well as of the reformist agenda of Taro Kono, whom Kishida defeated in the party leadership race.
“Kishida is trying to reposition the LDP as the party of growth and redistribution,” says Jeffery Kingston, director of Asian Studies at Temple University in Japan. “Abenomics is generally regarded as welfare for the wealthy.”
Japan PM dissolves lower house for Oct. 31 national election
TOKYO (AP) — Japan’s new Prime Minister Fumio Kishida dissolved the lower house of parliament Thursday, paving the way for Oct. 31 national elections. Kishida said he is seeking the public’s mandate for his policies after being elected prime minister by parliament only 10 days ago to replace Yoshihide Suga. Tadamori Oshima, the speaker of the more powerful lower chamber, announced the dissolution at a plenary session. At the announcement, all 465 lower house lawmakers stood up, shouted “banzai” three times and left. They've now lost their seats and official campaigning for a new lower house begins Tuesday.
Kishida’s plan for Japan’s economy
Consisting of monetary easing, fiscal stimulus, and structural tinkering, Abenomics achieved marginal gains by getting a handle on deflation and bringing more women into the workforce (albeit chiefly in non-regular jobs that were first to go when the pandemic struck). But the ultimate goal, of generating sufficient growth to spark deeper structural change and innovation, did not happen. Today, wages in Japan remain stagnant and household income is slightly down.
It is, of course, a problem that predates Abe. In 2001, the Koizumi administration unleashed bold, cost-cutting economic, administrative and structural enhancements in order to end the “” of Japan’s middle-income trap. The gains from those measures were uneven.
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President Joe Biden and new Japanese Prime Minister Fumio Kishida reaffirmed the U.S.-Japan alliance in a phone call on Tuesday.After Biden became the first head of state to speak with Japan's new Prime Minister Fumio Kishida, a readout carried by the White House called the U.S.-Japan alliance "the cornerstone of peace, security, and stability in the Indo-Pacific and around the world.
“That left a lot of the population impoverished and frustrated that their life was not getting better, and a lot of criticism that deregulation and reform really hadn’t benefited them,” says Saori N. Katada, an associate professor at of international relations at the University of Southern California.
But despite widespread criticism of Abenomics from across Japan’s political spectrum, few politicians have proffered any meaningful alternatives. “Many Japanese politicians espouse economic policies that are essentially a continuation or marginal modification of Abenomics,” says Kristi Govella, deputy director of the Asia Program at the German Marshall Fund of the United States.
Kishida, however, is pinning his hopes on an “income-doubling plan.” His chief election rallying cry harks back to an initiative of the same name by Prime Minister Hayato Ikeda in 1960. Ikeda spearheaded Japan’s export boom while expanding the social safety net for society’s poorest. Notably, he succeeded Nobusuke Kishi—Abe’s grandfather—who was forced to resign after he fixed a parliamentary vote on Japan’s security treaty with Washington.
Fumio Kishida elected new head of government of Japan
The former foreign minister is thus successor to the previous Prime Minister Yoshihide Suga. Kishida wants to advance the new elections on October and announced a "restart" for Japan. © Eugene Hoshiko / AP / DPA / Picture Alliance Provided by Deutsche Wave Japan's Ex-Foreign Minister Fumio Kishida is new head of government. The lower house of the National Parliament chose the conservative as expected.
The circumstances of Kishida’s appointment are less dramatic. With the Olympic Games in the rear-view mirror and Japan getting a handle on COVID-19—is fully vaccinated despite a slow start—Kishida can also be fully focused on pocket-book issues. He has promised a spending package of tens of billions of dollars through the year’s end, as well as government subsidies to assist small- and medium-sized businesses.
Analysts don’t read too much into the recent stock market ripples, either. Japan’s bourses are expected to outperform the U.S. over the next two years, according to Marcel Thieliant, an economist focusing on Japan for Capital Economics. “Valuations are not as stretched as the U.S.,” he says. “In the end, what matters is how much corporate profits will rise and the outlook is fairly positive.”
Redistributing Japan’s wealth
The new prime minister’s big problem is how to pay for redistribution without alienating the affluent. Japan’s ratio of public debt to GDP stands at 256%——and while Japan’s central bank has kept interest rates low, Kishida has little wiggle room to keep borrowing.
Japan general election: PM Kishida dissolves Parliament ahead of October 31 vote
Japan's Prime Minister Fumio Kishida dissolved Parliament's lower house on Thursday, setting the stage for a general election this month as he seeks to rouse support for his newly formed government. © Koji Sasahara/AP Fumio Kishida delivers a speech during an extraordinary Diet session at the lower house of Parliament in Tokyo, on October 11. The vote, to be held on October 31, will be Kishida's first major test after he won the ruling party's leadership election on September 29 and was officially appointed Japan's 100th Prime Minister on October 4.
Gains from stock transfers and dividends are taxed at a flat rate of 20%, which Kishida has criticized as a source of inequality and in need of redress, but income tax is already peaking at 55%. The new prime minister has meanwhile proposed to offer tax incentives to companies that raise employee wages, but that policy was adopted by Abe with little success.
Export-wise, Kishida is expected to maintain a tough political posture on Japan’s biggest trading partner, China. He has recommended creating a special office for human rights, which would undoubtedly have stern words for Beijing and risks courting the ire of Chinese consumers. “When nationalist sentiment flares up, it can have pretty bad results for Japanese firms operating in China,” warns Thieliant.
Cutting inefficiencies would be one way to boost livelihoods. Japan remainsthan the U.S. and there will be calls to cut red tape and get more women and seniors into gainful employment, with efforts to raise social benefits for those in non-regular work up to the same level as the “salary men.” A new Public Price Evaluation Review Committee will also aim to lift wages for caregivers and childcare staff, and Kishida has called for more support for schooling and housing costs for parents.
For now, the market is watching to see how far the prime minister’s new capitalism will go.
“Kishida’s hope is that economic growth and wealth redistribution will interact in a virtuous cycle,” says Govella. “But some are concerned that he will prioritize redistribution and end up stymieing growth in the process.”
Japan LDP election platform draft does not mention financial tax .
Japan LDP election platform draft does not mention financial taxTOKYO (Reuters) - Japanese Prime Minister Fumio Kishida's ruling Liberal Democratic Party (LDP) made no mention of reviewing financial income tax in its campaign platform for the Oct.31 general elections, a draft obtained by Reuters showed.