Japanese Prime Minister Fumio Kishida won’t run for a second term as leader of the long-ruling Liberal Democratic Party in September, opening the way for a race to succeed him as premier.
“I will devote myself to supporting the new leader selected through the presidential election as a foot soldier,” Kishida said at a nationally broadcast news conference on Wednesday.
Given the LDP’s dominance in parliament, the winner of its leadership race, expected for late September, is virtually assured of becoming the next prime minister. Kishida’s successor will be Japan’s third prime minister since Shinzo Abe, the country’s longest-serving leader, stepped down in September 2020.
The yen strengthened on the news, rising about 0.3% against the dollar at 12:08 p.m. in Tokyo, while Japanese share indexes were mixed, with the Nikkei down 0.2% and the Topix gaining 0.5%. Japanese government bond futures were little changed.
Support for Kishida has been languishing under 30%—seen as the danger zone for Japanese premiers—for months amid voter dissatisfaction with his handling of a scandal over party factions that were found to have concealed income generated at fundraising events. Inflation and a yen slump added to his woes.
Kishida’s government and the central bank have sought to show a united front and restore calm to financial markets, after the biggest stocks plunge in more than three decades this month triggered criticism of monetary policy tightening and cast a shadow over efforts to get households to invest their assets.
Kishida’s predecessor, Yoshihide Suga, criticized Kishida in a June 23 media interview and said it would be key for the LDP to bring a “sense of change” at the next leadership election.
“The first and most obvious step to show that the LDP will change is for me to step aside,” Kishida said Wednesday.
While no general election needs to be held until 2025, some surveys have shown the main opposition Constitutional Democratic Party gaining on Kishida’s LDP in terms of current voting intentions. The CDP will hold its own leadership race in September.
The next premier may still call an election to firm up the new government’s mandate. But the LDP and its junior coalition partner Komeito are expected to easily keep control given their powerful position in national politics.
It is unclear who will replace Kishida as premier, although former Defense Minister Shigeru Ishiba was the most popular choice in local media surveys. Other names that often come up in polls include Digital Transformation Minister Kono Taro, Foreign Minister Yoko Kamikawa and Shinjiro Koizumi, the son of a former premier.
“The market implication is that Japanese politics is going to be foggy,” said Shoki Omori, chief desk strategist at Mizuho Securities. “Market participants are going to dislike the uncertain situation, especially those investing in risk assets, such as equities.”
A former defense minister who has made several unsuccessful runs for the leadership role, Ishiba regularly tops the list of politicians voters would like to see as the next premier. In recent weeks, Ishiba has expressed support for the Bank of Japan’s normalization of monetary policy. On his website he advocates policies including reinvigorating domestic demand to spur growth, rather than relying on foreign trade.
An outspoken maverick and fluent English speaker who has long been popular with the public and the LDP at large, Kono lost to Kishida in the last party presidential election due to a lack of backing from his parliamentary peers. Yet the fact he is seen as an outsider could prompt the party to turn to him to refurbish its image, which was tarnished by a political fund-raising scandal. Currently minister for digital transformation, Kono has a wealth of cabinet experience, having served as foreign minister and defense minister. Kono has softened his opposition to nuclear power in recent years. He’s expressed concern about Beijing’s rise and has said Japan should join the “Five Eyes” intelligence grouping comprised of Australia, Canada, New Zealand, the UK and the US. In an interview with Bloomberg TV last month, Kono urged the BOJ to lift interest rates to support the yen.
Foreign Minister Kamikawa is a Harvard graduate who ran her own consulting firm before going into politics. If chosen, she would become Japan’s first female premier. She is known for her efforts to promote women candidates, an uphill battle given that only about 12% of LDP lawmakers are female. Kamikawa has also come under fire from activists for signing off on as many as sixteen executions, including six members of the Aum Shinrikyo doomsday cult, while serving as the justice minister. Kamikawa is an English speaker.
A party heavyweight who recently said the Bank of Japan should more clearly show its intention to normalize monetary policy, Motegi is currently the secretary-general of the LDP and former foreign minister. He’s also a Harvard graduate and has a tough guy image within the LDP. Political analysts say Motegi might be able to replicate the personal relationship formed by late former Prime Minister Shinzo Abe with Donald Trump if Trump wins the US presidential election in November.
The son of former premier Junichiro, Shinjiro Koizumi attracted attention in September for surfing off Fukushima in a bid to soothe concerns over safety following the release of treated waste water from the wrecked nuclear plant nearby. A former environment minister and proponent of renewable energy who attacked government support for coal generation, he made headlines for marrying a well-known TV newscaster and for becoming the first serving cabinet minister to take paternity leave. He has largely kept a low profile since telling a 2019 news conference he wanted to make the fight against climate change “sexy”—a remark seen by many in Japan as a gaffe. In a sign he may be willing to take on his country’s vested interests, Koizumi set up a cross-party group in November to advocate for the introduction of ride-sharing apps to help resolve the shortage of taxi drivers.
A former heavy metal drummer turned hard-line conservative, Takaichi has cited the late UK Prime Minister Margaret Thatcher as an inspiration. Though currently serving as minister for economic security, she set up her own study group in November, which raised eyebrows because it’s seen as a means of gathering support for a leadership challenge. Selecting Takaichi, a frequent visitor to Yasukuni Shrine, which is regarded across the region as a symbol of Japan’s past militarism, would endanger the country’s recent rapprochement with South Korea and could further sour ties with China. She has advocated more reliance on nuclear power and expressed concerns about environmental damage caused by solar panels. Takaichi was an admirer of the late former Prime Minister Shinzo Abe and in her 2021 run for the leadership expressed support for his ultra-loose monetary policy stance.
The former health minister and chief cabinet secretary is a dark horse but also the type of person who could emerge as a compromise candidate. The seven-term lawmaker helped guide Japan through the Covid-19 pandemic, when the country fared better than most of the other Group of Seven members. Kato has not ruffled a lot of feathers in the ruling party, which could work in his favor, while playing key roles under the last three premiers. He worked at the Ministry of Finance before entering politics.
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