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Last month, Japan elected its first female Prime Minister in its history, as Sanae Takaichi was became leader of the Liberal Democratic party (LDP) by both the powerful Lower House with 237 votes, and the Upper House with 125 votes. This was Takaichi’s third attempt at running for Japan’s top role, having been an MP since 1996 and holding multiple cabinet positions. Despite being a member of the Liberal party, Takaichi is a staunch Conservative, seeing her political role model as British Prime Minister Margret Thatcher, describing her aims in government to ‘become an Iron Lady’. Her landmark victory was heavily due to a coalition with the rising right wing Komeito Party, which much like the UK’s reform party, is starting to gain traction amongst the Japanese electorate.
But Takaichi’s takeover comes at a tricky time for Japan both domestically and internationally. This is Japan’s fourth Prime Minister in five years, a sign of Japan’s growing frustration with economic stagnation, whilst a lack of certain public goods in key markets continue to affect the day to day lives of the Japanese people. A shortage rice for example means the price of Japan’s most staple food continues to increase, further affecting the cost of living. Meanwhile labour shortages as a result of Japan’s ageing population have potential to increase Japan’s market vulnerability over the long term. This has contributed to Japan’s economy contracting for the first time in six quarters, according to Reuters.
Yet, the biggest issue facing Japan’s new Prime Minister is the damage of relations between its major trading partners. As part of President Donald Trump’s tariffs on international goods Japan has been hit with a 15% tariff on all exports to their largest export partner, resulting in an estimated decline of 2.5% of GDP this year. But more recently, Japan’s Prime Minister rattled their Asian neighbour China following comments were made by Takaichi over a tougher stance on China’s claims to the Island of Taiwan. Beijing are reportedly angered over the new government’s stance, with recent bilateral meetings in Beijing said to be ‘solemn’ according to Chinese spokesman Liu Jinsong. Sino-Japanese have always been tense due to a long history of historical conflicts, but with boycotts on travel and imports of certain goods now on the table this latest political schism could cost the Japanese economy $14 billion a year on travel alone. Not only would this be a substantial loss of revenue, but it could also lower Japan’s investment opportunities, as trade war between China would spell economic disaster for a country that relies on 60% of its imports from Beijing. Its therefore likely that improving trade relations between Japan’s two largest economic partners will be at the top of Takaichi’s agenda at the upcoming G20 meeting in South Africa.
So, with domestic economic woes, and damaged international relations, can Takaichi buck the trend of short-term Prime Ministers in Japan? The government is in the process of assembling a $135.8 billion stimulus to help manage the with the cost of living and inject new life into Japan’s economy. But these are measures are yet to be fully announced and will only result in short term gains if international volatility is going to continue damaging Japan’s economy. It reveals a large mountain to climb for Japan’s new Thatcher, if she is to blossom as Japan’s new leader.
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