Fumio Kishida wins vote to become Japanese ruling party leader, PM

September 29, 2021

TOKYO (Reuters) -Fumio Kishida, a former foreign minister, on Wednesday won the race to lead Japan’s ruling Liberal Democratic Party (LDP) party and become the next prime minister.

The soft-spoken Kishida, 64, won a run-off against vaccine minister Taro Kono with 257 votes to 170.

Here are some reactions to the news.

JESPER KOLL, EXPERT DIRECTOR, MONEX GROUP

“A win for the establishment. Kishida stands for stability, for not rocking the boat and most importantly, doing what elite technocrats tell him to do. Clearspeak – on economic and financial policy, Kishida will follow a path of steadfast by incremental change.”

“With Kono, there was a chance of more radical, pro-business reform. With Kishida, it’ll be predictable, consensus-driven and incremental.”

TAKESHI NIINAMI, SUNTORY HOLDINGS CEO

“The delays of Japan’s economy as a result of the coronavirus pandemic are, compared to the rest of the world, in a dangerous situation.”

“I would like them to thoroughly examine the measures taken so far, promptly prepare laws and reform the administrative system.”

“On top of this, in order to get rid of the worries of citizens, the development of a sustainable social security system is essential, administrative reforms to promote digitalisation and policy management to achieve medium-to-long term economic growth by boldly implementing investment tax cuts without incidental conditions.”

MASAAKI KANNO, CHIEF ECONOMIST, SONY FINANCIAL HOLDINGS

“If anything, Kishida’s policies will likely focus on income distribution compared to Abenomics.”

“The global economy is slowing down, in part due to coronavirus-linked supply chain disruptions in Southeast Asia, alongside power shortages in China, which are said to push down operating rates of factories. The economy is facing downward pressure due to these supply-side issues.”

“The good news is that the fifth wave of coronavirus infections has decreased extremely rapidly so Kishida is lucky. Even if cash handouts aren’t distributed at this time, GDP is likely to grow in the fourth quarter centred on consumption due to pent-up demand.”

CHRISTIAN DE GUZMAN, SENIOR VICE PRESIDENT, MOODY’S INVESTORS SERVICE

“We do not expect much of a departure from currently accommodative fiscal and monetary policies, while the Suga administration’s emphases on decarbonisation and digital transformation will likely be carried over into the next government.”

“Nevertheless, the credit implications of the leadership transition will ultimately be determined by the ability of Kishida to secure a strong mandate in the forthcoming general elections, which could support difficult reforms promoting economic growth and fiscal sustainability.”

TORU SUEHIRO, SENIOR ECONOMIST, DAIWA SECURITIES

“The general direction will be that, instead of Abenomics’s trickle-down theory that assumed a huge monetary easing will boost big companies’ profits and then spread to other parts of the economy, (Kishida) explicitly refers to redistribution. So his policy is not just about a laissez-faire economic growth, and it might be unfavourable for market participants.”

COREY WALLACE, JAPANESE POLITICS EXPERT AT KANAGAWA UNIVERSITY

“Kishida winning the run-off was not a surprise, but eking out a first round plurality in the voting was somewhat.”

“I expect that Kishida and his cabinet will try to be reasonably equanimous and thus he will distribute positions throughout the factions to keep party peace.”

“If he is smart and does try to address the interests of the middle class better, as he said he would, he may end up being a longer-lived premier than many are predicting. If he does not, then he may face trouble in the upper house election next year, rather than the one coming up where he should benefit from stimulus and a honeymoon period.”

KOICHI NAKANO, POLITICAL SCIENCE PROFESSOR, SOPHIA UNIVERSITY

“We know who will continue to hold power in the LDP – it’s (former premier Shinzo) Abe and (Finance Minister Taro) Aso and the right wing. There is no mood for generational change.”

“A whole month of monopoly over TV and newspaper coverage in the run-up to the election cannot be bad for the LDP but the underwhelming result will dampen the celebratory mood quickly, possibly. The opposition must be relieved that they don’t have to fight against the darling of television (Kono).”

“Kishida’s showing was respectable even among the rank and file members, so much so that he came out ahead in the first round, which no one expected.”

JEFFREY HORNUNG, RAND CORPORATION

“I don’t expect any big changes in foreign policy. The changes, where they occur, will likely be on the margins and in terms of style. Kishida will continue to prioritize the alliance and find ways to strengthen it: free and open Indo-Pacific will continue to be a mainstay of Japan’s diplomatic toolkit in its outreach to the region; and he will continue to take a hard position against China.”

“Taiwan is the biggest question for me. Although there is nothing new policy-wise in terms of Japan’s thinking about Taiwan, the importance of Taiwan for Japan’s security, or even commitments to assist the U.S. in a Taiwan contingency, the Suga administration has been publicly active in having a conversation about Taiwan. There is an appetite for continuing this approach within the LDP, but it will be interesting to see whether the new leader takes this approach, such as advocating for Taiwan’s inclusion in CPTPP (the Comprehensive and Progressive Agreement for Trans-Pacific Partnership).”

MASAKI KUWAHARA, SENIOR ECONOMIST AT NOMURA SECURITIES

“From the standpoint of economic growth, Kono may have been a better choice than Kishida given his focus on reform and renewable energy policy in the medium to long run. Given a fragile economy, there’s not much room for Kishida to deviate from Abenomics though.”

“Kishida appears to focus on distribution of wealth but such left-leaning policy doesn’t necessarily mesh with economic growth. Kishida is good at building consensus though, which will bring stability to politics needed to steer socio-economy.”

“As Kishida, or whoever, becomes new prime minister, monetary easing remains on track. Kishida is unlikely to exit from massive monetary stimulus or raise interest rates any time soon as doing so could boost the yen.”

(Reporting by Tokyo bureauEditing by Robert Birsel)

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