Japan PM contender Kishida says new form of capitalism needed to end disparity, recover from pandemic

umio Kishida is the only Liberal Democratic Party member to announce his candidacy in a leadership vote on Sept 29. PHOTO: REUTERS

JTOKYO (REUTERS) - Japan should strive for a new form of capitalism to reduce income disparity that has worsened under the coronavirus pandemic, says former foreign minister Fumio Kishida who hopes to become leader of the ruling party and next prime minister.

Mr Kishida was the first Liberal Democratic Party (LDP) member to announce his candidacy in a leadership vote on Sept 29, after Prime Minister Yoshihide Suga last Friday (Sept 3) said he would step down. The winner of the vote is all but assured to be Japan's next prime minister.

Former internal minister Sanae Takaichi on Wednesday (Sept 8) joined Mr Kishida in the contest, unveiling a conservative platform, while popular coronavirus vaccination minister Taro Kono met party heavyweights as he weighs his chances.

Ms Takaichi, 60, if successful, would become Japan's first female leader.

Mr Kishida said deregulation during the reform era in the early 2000s widened the gap between the haves and have-nots and that former prime minister Shinzo Abe's "Abenomics", that sought to fix tattered finances by achieving high growth and boosting tax revenues, did not see benefits trickle down.

"Without distribution of wealth, there won't be a rise in consumption and demand... there won't be further growth if distribution of wealth is lost," Mr Kishida said at a presentation of his economic proposals in Tokyo on Wednesday.

"I'll aim to build new Japan-style capitalism. The biggest challenge in macroeconomic policy is to end deflation. I'll stick to three-pronged steps of bold monetary policy, flexible fiscal spending and growth strategy," he said.

"There's no doubt Abenomics has brought a major achievement on growth but in terms of distribution of wealth, trickle-down has not yet happened."

Mr Kishida repeated a call for an economic stimulus package worth "tens of trillions of yen" to combat the coronavirus pandemic. He said he would use fiscal spending for achieving economic stability while not giving up on fiscal consolidation.

He said the Bank of Japan should maintain its 2 per cent inflation target as "it is a global standard" and changing it would send a wrong message to markets, and would leave the sales tax untouched for the time being.

Mr Kishida also called for setting up a 10 trillion yen (S$122 billion) university fund to stimulate science and promotion of renewable energy, while retaining nuclear power technology, which he said should be considered as a clean energy option.

Takaichi joins race

Ms Takaichi has the backing of former prime minister Shinzo Abe, local media said, and would base her challenge on policies to fend off China's technology threat and help strengthen an economy battered by the coronavirus pandemic.

Ms Takaichi became the first female internal affairs minister in the second Abe administration in 2014.

But even as local media have said influential Abe has thrown his support behind Ms Takaichi helping her obtain the 20 lawmaker backers needed to run in the leadership election, she has ranked poorly in popularity ratings, which could hamper her chances.

Grassroots LDP members will vote in the leadership election along with the party's members of Parliament, and whoever wins will lead the party to the Lower House election that must be held by Nov 28, making public appeal an important factor in choosing the new leader.

Ms Takaichi has said she wanted to work on issues left unresolved by previous administrations, such as achieving 2 per cent inflation, and introducing legislation "that prevents the leakage of sensitive information to China".

She said an extra budget needed to be compiled as soon as possible to bolster Japan's medical system, which is under strain because of the pandemic.

A member of the party's most conservative wing, she often visits the Yasukuni Shrine, a memorial to Japan's war dead. Such visits by Japanese leaders infuriate old wartime foes such as China and South Korea.

She has also opposed allowing married couples to keep separate surnames, to the disappointment of promoters of women's rights.

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