Explained: The daunting challenges Shigeru Ishiba faces as Japan's new PM

Japan’s Prime Minister Fumio Kishida resigned with his Cabinet on Tuesday, paving the way for his likely successor Shigeru Ishiba to take office.

Ishiba was chosen as the governing Liberal Democratic Party’s leader on Friday to replace Kishida, who announced in August he would resign at the end of his three-year term.

The 67-year-old former defence minister is virtually assured of being formerly designated premier due to his party’s majority in parliament.

The veteran lawmaker, seen as somewhat of an outsider in his party who failed at four previous leadership bids, has already begun picking government and party officials who will contest the upcoming general election with him.

Here are the five key challenges he will face when he becomes the new Japanese PM.

Security threats

After China’s military aircraft made its first confirmed breach into Japanese airspace in August, tensions have escalated over China’s increasingly assertive actions in the region. Since then, a number of instances have strained relations, notably the Shenzhen schoolboy’s fatal stabbing.

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Ishiba, who is an expert in security policy, has proposed an Asian version of the NATO military alliance and more discussion among regional partners about the use of the US nuclear deterrence.

He also suggested a more equal Japan-US security alliance, including joint management of US bases in Japan and having Japanese Self Defence Force bases in the US.

Ishiba outlined his views in an article for the Hudson Institute last week.

“The absence of a collective self-defence system like NATO in Asia means that wars are likely to break out because there is no obligation for mutual defence. Under these circumstances, the creation of an Asian version of NATO is essential to deter China by its Western allies,” he wrote.

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Nonetheless, “there is no need to hyperventilate about the prospects for dramatic change” in defence strategy, according to Nicholas Szechenyi of the Centre for Strategic and International Studies.

“The rapidly deteriorating security environment in Asia favours more security cooperation with the United States and other partners,” he said.

LDP’s controversial image

Outgoing PM Kishida, who took office in 2021, was dogged by scandals over party funding and lawmakers’ links to the Unification Church.

Ishiba plans to call a parliamentary election for October 27 after he is formally chosen as PM later in the day.

He has pledged to make the LDP “a fair and just party” again.

The LDP has had a nearly unbroken tenure governing Japan since World War II.

James Brady of consulting firm Teneo believes Ishiba’s “ability to reflect the popular mood was evident earlier this year in his criticism of his party’s response to the political funding scandal.”

However, a snap election could also rehabilitate some disgraced party members, said Naofumi Fujimura, a professor at the Graduate School of Law at Kobe University.

“In Japan, if you win an election, you are considered to be purified,” so some MPs “involved in the scandals may return to the public stage”, he told AFP.

Economic challenges

Japan’s growth has long been hindered by slow wage growth and spending.

Ishiba supports the Bank of Japan’s progressive departure from its ultra-loose policies; this decision was made in response to his success in the LDP ballot, which sent Japanese stocks plunging on Monday.

His win “implies less pressure… for large-scale debt-funded spending or a return to monetary easing by the Bank of Japan”, policies championed over a decade ago by assassinated ex-premier Shinzo Abe, said Teneo’s Brady.

To help the government’s existing plan to ramp up defence spending to two per cent of GDP by 2027, Ishiba has suggested a hike in corporate taxes.

He also pledged to continue Kishida’s economic policy aimed at pulling Japan out of deflation and achieving real salary increases, while tackling challenges such as the country’s declining birthrate and population and resilience to natural disasters.

Ageing population, low birthrate

Japan has the world’s oldest population after tiny Monaco.

The country’s population aged 100 or older is at a record high of more than 95,000, as per the latest data.

Ishiba plans to raise the country’s low birth rate by introducing measures such as a review of the country’s notoriously long working hours, and expanding support for parents.

Together with security and disaster prevention, he has referred to the revitalisation of rural areas—where ageing populations are getting fewer and more isolated—as “my life’s work.”

Climate policy

Japan aims to be carbon neutral by 2050.

Ishiba wants to increase the country’s reliance on renewable energy sources in addition to nuclear power, which is still controversial in the wake of the Fukushima nuclear accident in 2011.

Japan has the biggest reliance on fossil fuels and is ranked last among the G7 countries in terms of measures to cut emissions from their power systems, according to the E3G think tank.

Economist and former Bank of Japan board member Sayuri Shirai told AFP that Japan needs to focus more on decarbonisation strategies, especially in business.

“If Japanese companies don’t do that, they will lose out to global competition” because high-carbon emission goods could be punished with taxes and tariffs, she said.

With inputs from agencies