According to reports, former Japanese Economic Security Minister Sanae Takaichi won the Liberal Democratic Party leadership election held on October 4, becoming the party’s first female leader.
Sanae Takaichi is expected to become Japan’s first female prime minister, but she faces significant challenges. Domestically, the immediate concern is Japan’s economy—high inflation, stagnant wages, weak growth, high government debt, and constraints from slow industrial development (such as in AI). Externally, she must navigate international cooperation and address global scrutiny over whether she will handle international relations from a right-wing stance. Additionally, she needs to reunite the Liberal Democratic Party and consider alliances with opposition parties.
At a press conference on October 4, newly elected LDP leader Sanae Takaichi outlined an active fiscal policy direction, proposed early reduction of gasoline taxes, and emphasized close dialogue with the central bank. She also suggested supporting loss-making companies in raising employee wages and exploring increased subsidies for local governments to address rising prices.
Takaichi has consistently maintained a dovish monetary policy stance, similar to Abenomics in fiscal and financial policies. She advocates for active fiscal policy and loose monetary policy while opposing interest rate hikes. However, the current economic environment differs from when Abenomics was first introduced. At that time, Abenomics’ “three arrows” effectively stimulated the economy. Japan had been experiencing decades of price declines and deflation. The core goal of Abenomics and the LDP had been to create a growth cycle through inflation, increase wages, boost consumption, and drive economic growth.
Currently, Japan’s inflation rate exceeds 2%, and purchasing power is declining. The LDP has introduced various measures, such as subsidies for oil and electricity prices and tax reductions. However, due to fiscal discipline considerations, direct subsidies to promote consumption have not been fully unleashed. The effectiveness remains limited, which is a significant constraint for the government in addressing economic challenges. Japan’s economy now faces high inflation, weak growth, and high government debt. Loose monetary policy could exacerbate inflation, especially given the concerningly low growth in ordinary people’s wages.
Takaichi has also proposed supporting companies in raising wages, primarily through tax reductions. She plans to provide relevant tax breaks for loss-making small and medium-sized enterprises and reduce corporate taxes for companies that increase wages through a “wage promotion tax system” to encourage salary hikes. However, some opinions suggest that even with tax reductions, it might be insufficient for severely struggling companies.
Regarding government debt, a market concern, Japan’s government debt-to-GDP ratio has reached as high as 240%. Takaichi’s active fiscal policy still proposes issuing deficit-covering bonds. At a joint press conference with other candidates on September 23, she stated that “issuing government bonds is unavoidable in unavoidable circumstances.” However, allowing the issuance of deficit-covering bonds to address high inflation could further expand the deficit. Although Takaichi suggested using “net debt balance” to measure government fiscal health—calculated by deducting financial assets from national and local debt balances—which stood at 136% as of 2023, making the figure appear better, the fundamental fiscal condition remains unchanged.
While Takaichi faces numerous challenges, such as weak economic growth, stagnant wage increases, an aging population, and difficulties in related industries, her immediate priority is addressing inflation. However, as mentioned, Japan may not currently have the conditions to replicate “Abenomics.”
Takaichi’s election as LDP leader has attracted significant attention as Japan’s first female party leader, with her previous policy positions under scrutiny. Reportedly, she was once a heavy metal drummer and motorcycle enthusiast, a fan of the late former British Prime Minister Margaret Thatcher, calls herself the “successor of Abenomics,” and is regarded as former Prime Minister Shinzo Abe’s “protégé.” She has also made strong nationalist statements, emphasizing Japan’s interests first, and advocates strengthening Japan-U.S.-South Korea cooperation in global supply chains, supply networks, and critical security elements of the global economy (such as semiconductors).
Some opinions tend to worry whether her right-wing stance might bring adverse effects. Geopolitically, she undoubtedly upholds Japan’s traditional values, such as strengthening Japan-U.S.-South Korea cooperation to create regional balance, reflecting the U.S.’s consistent “offshore balancer” geopolitical strategy. However, candidates’ positions and policy orientations are often more radical during elections, tending to become more balanced once in power, considering multiple factors. In this regard, Europe’s female conservative leaders serve as good examples. In 2022, Italy’s far-right party leader Giorgia Meloni became prime minister, and concerns arose about what might happen under a conservative populist leader. However, recent years have shown she has not fully implemented her previous强硬主张 after taking office.
