Japan is witnessing a historic moment as Prime Minister Sanae Takaichi celebrates a decisive victory in the recent election. Her ruling coalition has achieved a commanding two-thirds majority in the influential lower house, solidifying her position as Japan’s first female premier.

This electoral success grants Takaichi a robust mandate to pursue her conservative agenda and shape the future of the nation, which is home to 123 million people. Her leadership will be pivotal over the next four years, offering the potential to leave a significant imprint on the country’s policies and international relations.

The Asia-Pacific region is keenly observing how Takaichi will navigate the delicate balance with China, especially after her remarks about Taiwan in November sparked tensions with Beijing. The international community is eager to see whether she will escalate or ease diplomatic relations in the coming months.

On the economic front, Takaichi’s victory has been welcomed by investors, as evidenced by the surge in Japan’s stock market shortly after the election results were announced. This positive response indicates investor confidence in her fiscal policies and leadership.

Before her triumph in Sunday’s snap election, there were concerns in financial markets regarding Japan’s public finances and its substantial debt. These worries revolved around her plans to cut taxes and increase spending in the world’s second-largest economy.

In response to these concerns, Takaichi reaffirmed her commitment to fiscal responsibility. “We have consistently stressed the importance of responsible and proactive fiscal policy,” she emphasized late on Sunday, reassuring both domestic and international stakeholders of her intentions to manage the economy prudently.

“We will prioritise the sustainability of fiscal policy. We will ensure necessary investments. Public and private sectors must invest. We will build a strong and resilient economy,” she said.

The New York Times reported shares of major exporters like Toyota Motor rose as the yen softened against the dollar.

Investors were also reported to have purchased shares of companies expected to benefit from her spending priorities, including those in the artificial intelligence, semiconductor, and defence sectors.

“She’s a highly respected and popular leader,” says Trump

US President Donald Trump took to Truth Social to congratulate Takaichi on her victory — following his endorsement of her prior to the election.

Reuters reported that in November, Trump asked her not to anger China in a private phone call, according to sources.

She’s expected to visit the US on 19 March.

Hit with young voters

Capitalising on her honeymoon start after becoming Japan’s fifth premier in as many years in October, Takaichi called the snap election last month.

The gamble paid off handsomely, with local media projecting late Sunday that her Liberal Democratic Party (LDP) won around 300 seats of the 465 contested.

Together with its junior coalition partner, the ruling bloc was expected to have garnered at least the 310 seats needed for a two-thirds majority.

Takaichi has injected new life into the LDP, which has governed Japan almost non-stop for decades but has shed support in recent elections because of unhappiness about rising prices and corruption.

A heavy metal drummer in her youth, Takaichi was an admirer of Britain’s ‘Iron Lady’ Margaret Thatcher, and on the ultra-conservative fringe of the LDP when she became party chief.

She has been a hit with voters, especially young ones, with fans lapping up everything from her handbag to her jamming to a K-pop song with South Korea’s president.

But she will have to deliver on the economy to remain popular.

“With prices rising like this, what matters most to me is what policies they’ll adopt to deal with inflation,” voter Chika Sakamoto, 50, told AFP at a voting station in snowy Tokyo on Sunday.

Relationship with China

Before becoming prime minister, Takaichi was seen as a China hawk.

She was a regular visitor to the Yasukuni Shrine, which honours convicted war criminals along with 2.5 million war dead and is seen as a symbol of Japan’s militarist past.

Barely two weeks in office, Takaichi suggested that Japan could intervene militarily if China sought to take self-ruled Taiwan by force.

China regards the democratic island as part of its territory and hasn’t ruled out force to annex it.

With Takaichi having days earlier pulled out all the stops to welcome Trump, China was furious with her unscripted remarks. It summoned Tokyo’s ambassador, warned its citizens against visiting Japan and conducted joint air drills with Russia.

Margarita Estévez-Abe, associate professor of political science at Syracuse University, said Takaichi can afford to dial down tensions now.

“Now she doesn’t have to worry about any elections until 2028, when the next upper house elections will take place,” Estévez-Abe told AFP before the vote.

“So the best scenario for Japan is that Takaichi kind of takes a deep breath and focuses on amending the relationship with China.”

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