What's next for Japan PM Abe after convincing election win?

Japanese Prime Minister Shinzo Abe prior to a press conference at his ruling Leberal Democratic Party headquarters in Tokyo on July 11, 2016.
Japanese Prime Minister Shinzo Abe prior to a press conference at his ruling Leberal Democratic Party headquarters in Tokyo on July 11, 2016.PHOTO: AFP

TOKYO (Bloomberg) - Japanese Prime Minister Shinzo Abe's convincing win in Sunday's election has put him on course to scrape the two-thirds majority needed to press ahead with his long-held ambition of revising the country's pacifist constitution.

He also vowed to take "bold" action on the economy.

Here's a look at what's on Abe's plate over the coming months:

Constitutional Scrap

With his coalition having a two-thirds majority in the lower house, Abe will come under pressure from conservative backers to push ahead with constitutional revision. But any attempt to alter the pacifist Article 9 would meet foot-dragging from his main coalition partner, the Buddhist-backed Komeito party, and then face uncertainty in a national referendum. It also could exacerbate tensions with China.

Katsuhiko Nakamura, executive director of Tokyo think tank Asian Forum Japan, pointed out that not all members of the LDP are on the same page on constitutional change. "I don't think there's any chance he will move to change Article 9 straight away. He must consider his priorities for the two years he has left of his tenure, and this won't be a simple matter."

Abe, whose LDP tenure ends in 2018, said after the polls closed Sunday that he didn't see the upper house election victory as a mandate to change the constitution, adding that he wanted to discuss potential revisions with other parties, including the main opposition Democratic Party. The constitution hasn't been modified since it was enacted in 1947.

Cabinet Shake-up

Abe will reshuffle his Cabinet in early August, Kyodo news reported Monday. One potential source of discord among senior LDP lawmakers eager for the spotlight could be the fact that Finance Minister Taro Aso, Chief Cabinet Secretary Yoshihide Suga and Foreign Minister Fumio Kishida have held their positions since Abe took office in December 2012.

Kishida and Shigeru Ishiba, the minister for regional revival, are seen as potential successors to Abe and may be replaced in the Cabinet changes.

While Okinawa Minister Aiko Shimajiri and Justice Minister Mitsuhide Iwaki lost their seats in Sunday's election, they needn't be replaced immediately, since there is no requirement for ministers to be lawmakers.

Fiscal Stimulus

As his coalition was sealing a majority on Sunday night, Abe repeated a pledge to stimulate a struggling economy, saying he wants "the swift formulation of comprehensive, bold economic measures."

While he declined to comment on the amount of such a stimulus package, one of his advisers recently called for 20 trillion yen (S$264 billion) to be spent in the current fiscal year.

Abe said Monday he would order the compilation of a stimulus package on Tuesday (July 12).

The big win for Abe also eases pressure on the Bank of Japan to expand its record monetary easing programme, Takahiro Sekido, Japan strategist at Bank of Tokyo-Mitsubishi UFJ, wrote in a note after the election.

Abe and his advisers can take time to think about a "big economic stimulus package," rather than look to monetary easing, Tokyo-based Sekido said.

Robert Feldman, chief economist at Morgan Stanley MUFG Securities Co. in Tokyo, wrote that the election results provide Abe with a "sweet spot" to focus on concrete measures to reform the economy.

China Tensions

Abe faces increasingly strained ties with his nation's biggest trading partner after the election victory, which the Chinese government-backed tabloid Global Times said could pose a danger to Japan and regional stability.

Long-running tensions over uninhabited islands near Taiwan that are claimed by both countries have worsened in recent weeks. A Chinese military vessel entered Japan-administered waters around the islands for the first time in June. China, in turn, said Japanese planes had "provoked" Chinese fighters patrolling the area last month, while Japan denied the accusations.

Relations between Asia's two largest economies face a further challenge Tuesday when an international tribunal rules on a South China Sea territorial dispute between China and the Philippines.

Japan has been among the loudest voices calling for respect for the rule of law in the waters, sparking angry responses from China, which has said it won't stand by the ruling.

Trade Deal

Abe also will have to make a decision on whether to push ahead with ratifying the Trans-Pacific Partnership - a US-led regional trade pact - in a parliamentary session scheduled for autumn.

"Given the bleak outlook for ratification by the United States -- and the fact that opposition to TPP may have contributed to opposition victories in several agriculture- intensive prefectures -- the government will have to decide whether it is worth expending political capital on an agreement that may never come into force," Tobias Harris, a Tokyo-based analyst with Teneo Intelligence, said in an e-mail.