SHEFFIELD, England: Sanae Takaichi, a hardline conservative with nationalist views, was elected as Japan’s first female prime minister on Oct 21. Known as a protege of the assassinated former Japanese Prime Minister Shinzo Abe, she is assertive on defence, hawkish on China and is keen to bolster Japan’s regional role.
Experts say it’s possible that Takaichi will leverage her ties to Abe as she attempts to curry favour with US President Donald Trump. Ahead of Trump’s recent visit to Japan, where he met Takaichi for the first time, he described Abe as “one of my favourites”.
As part of a trade deal signed in July, Tokyo promised to invest US$550 billion in the US in exchange for lower tariffs on Japanese goods. Takaichi reportedly wants Japan to have greater influence over these investments and to ensure they also benefit Japanese companies and contractors.
A key part of Takaichi’s leadership campaign was her pledge to revive Abe’s economic vision of high public spending and cheap borrowing, which became known as “Abenomics”. This economic programme was introduced in late 2012 as part of a strategy to counter China’s growing economic and political power.
The aim was to revitalise Japan’s stagnant economy through the “three arrows” of monetary easing, fiscal stimulus and structural reforms. The first arrow saw Japan’s central bank implement extreme measures, such as low or negative short-term interest rates, to make it cheaper for consumers and companies to borrow money and spend.
Japan’s central bank also purchased financial assets, including equities and long-term government bonds, aggressively. The hope was that this would make the private sector expect a subsequent rise in the price of goods and services, encouraging more investment. And selling bonds to the central bank should give banks more money to lend.
Abe’s second arrow involved the government increasing its spending by funding infrastructure projects or offering financial incentives like tax breaks for companies. And the third arrow introduced labour market deregulation, corporate governance improvements and policies encouraging women’s participation in the workforce.
