Battle for Leadership: LDP Election Promises to Set Course for Japan's Future

The contest for leadership of Japan's ruling party LDP is in full swing, significantly influenced by Prime Minister Shigeru Ishiba's announcement of his resignation. The winning candidate will face the challenge of realigning the party to stop the loss of supporters who have recently defected to populist opponents, costing the LDP its majorities in both houses of parliament. The winner is expected to be elected Prime Minister through a parliamentary vote and will then need to immediately find solutions for pressing issues such as ongoing inflation, regional security threats, and relations with U.S. President Donald Trump. Among the five major candidates, conservative pro-stimulus advocate Sanae Takaichi and reform-oriented Shinjiro Koizumi are favored. Takaichi is reputed among investors for expanding economic support and slowing the Bank of Japan's interest rate hikes. Koizumi, on the other hand, prefers a cautious fiscal approach and would allow the central bank to continue its normalization. The remaining contenders include current Cabinet Secretary Yoshimasa Hayashi, who is seen as a continuation of Ishiba's course, conservative alternative Takayuki Kobayashi, and former party leader Toshimitsu Motegi, known for his negotiating skills. Approaching the U.S. remains a central point for all candidates, even though their views on China vary. While Takaichi expresses more caution toward China, Hayashi is considered the most pro-China candidate. Another topic remains the handling of U.S. defense costs, including a large-scale investment plan of $550 billion. Today, the candidates present their programs at the LDP headquarters to convince members ahead of the presidential election on October 4. Voting is conducted by 295 parliamentary members and an equal number of votes from the LDP's membership base, which comprises a total of 916,000 people. The mood in the markets could be more stable than initially assumed due to the more moderate tones of all candidates. A survey by the Asahi newspaper shows a mixed picture of public opinion: Takaichi leads Koizumi among the general public but falls behind him among party supporters. Both garnered attention last year.