Japan’s New Premier Appeals to Middle Class Ahead of Key Vote

(Bloomberg) -- Japan’s new Prime Minister Fumio Kishida laid out plans to expand the middle classes as he seeks to bolster support ahead of a crucial national election to be held in three weeks. 

In his first policy address to parliament since taking office this week, Kishida reiterated a pledge of bold spending to help recover from the pandemic and said he’d build what he calls a “new capitalism,” under which the benefits of economic growth are spread more widely. 

The 64-year-old former foreign minister has just three weeks to galvanize support for his fledgling government before the Oct. 31 election that could set the tone of his term in office. His cabinet of political veterans has been met with a tepid public response, with one poll indicating the lowest support level for an incoming premier since 2008.

While none of the opposition parties boasts support of more than single figures, they plan to cooperate in many constituencies in a bid to reduce the ruling coalition’s majority. A major loss of seats could propel Kishida toward the “revolving door” that claimed six Japanese leaders between 2007-2012.

“Neoliberal policies have led to a deep divide between those who become wealthy and those who don’t,” Kishida said Friday. “Around the world, we are seeing a move to protect the middle classes, who are at the heart of a healthy democracy,” he added, saying he’d set up a panel to come up with concrete policies.

Kishida vowed to achieve the longstanding goal of defeating deflation and said he’d press businesses to share the fruits of growth with employees and subcontractors. His plans have worried investors, who sent the Nikkei 225 Average on an eight day losing streak that ended Thursday -- the longest such run since 2009.

“Kishida is trying to appeal to a broader audience compared with when he fought for the party’s leadership,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities. “Part of the reason is that his approval rate didn’t rise as much as he had anticipated.”

The new prime minister said a priority would be to tackle coronavirus policies and prepare for a worst scenario while the situation is calm. Cases have fallen dramatically in recent weeks, with confirmed new daily infections nationwide at 969 on Thursday, compared with more than 25,000 in mid-August.

On foreign policy, Kishida indicated continuity would be key, calling for dialogue with China, his country’s biggest trading partner, while pledging to work with countries that share Japan’s values to convey necessary messages to Beijing. He also vowed to take the Japan-U.S. alliance to new heights and cooperate with the Quad, which also includes Australia and India and is seen as balancing force against China in the region.    

The following are some of Kishida’s policy pledges:

• To achieve the target of defeating deflation through bold monetary policy, flexible fiscal policy and growth strategies
• To work on legislation on controlling the movement of people and securing health care resources, as well as encouraging the development of domestic vaccines and treatments
• To provide financial support for businesses that have been badly hit by the pandemic, regardless of region or industry, and in line with the size of the operation
• To provide cash handouts and other support for irregular workers and those raising children, who are particularly hard-hit by the pandemic
• The newly created Minister for Economic Security will be tasked with securing supplies of strategically important materials and preventing technology leaks; legislation will be compiled to promote economic security
• To work on creating an environment where businesses provide benefits not just to shareholders, but to staff and subcontractors; government to step up monitoring of subcontracting to achieve prosperity for large and small companies; non-financial disclosure will be strengthened and quarterly earnings announcements reviewed
• The government will strengthen tax breaks for companies that raise salaries
• To raise salaries for nurses and care workers and bolster after-school childcare services

On diplomatic and security policy:

• Will work on revising the National Security Strategy, National Defense Program and medium-term defense plan, including new issues such as strengthening the coastguard, introducing more effective missile defense measures and economic security
• To strongly urge South Korea to take appropriate actions “based on our consistent stance” to restore healthy ties
• No peace treaty can be reached with Russia without resolving the territorial dispute
• Will aim for an overall resolution of the abduction, nuclear and missile problems with North Korea

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