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LAST December, when Japanese voters threw out the left-leaning Democratic Party of Japan (DPJ), commentators warned of rising tensions with China as the incoming conservative government headed by a hawkish prime minister took a tougher line on territorial rows. But amid all the hand-wringing, two more subtle points about the election campaign and its aftermath were largely overlooked.

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MOST politicians and their supporters react with joy when they win leadership battles with large majorities. Not in Japan. On Sept 21, when Prime Minister Yoshihiko Noda convincingly defeated party rivals for the post of president of the left-leaning Democratic Party of Japan (DPJ), he looked glum.

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LAST month, when popular Japanese comedian Junichi Komoto was discovered to have arranged for his mother to collect welfare payments – despite the fact that he earned 50 million yen (S$807,000) a year – there was a national outcry.

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JAPAN’S electronics giants, say the pundits, are on the brink of collapse. Not only have they become less competitive than their cheaper South Korean rivals, they have also lost the lead they once held in cutting-edge technologies. But while there is no shortage of evidence to support these ideas, it would be unwise to write off the Japanese just yet.

Key Political Risks

With the conservative Liberal Democratic Party (LDP) having won the December 16 parliamentary elections, Japanese foreign and domestic policy will shift to the right. The new prime minister is Shinzo Abe - a nationalist well-known for his hard-line stance against North Korea and his denial that Japanese forces abducted "comfort women" during the Pacific War.

But fears that he may worsen already strained ties with China over ongoing territorial disputes are probably exaggerated. Mr Abe proved to be very pragmatic in his dealings with China when he was prime minister from September 2006 to September 2007.

Despite the LDP's win, Mr Abe is not popular among voters, and he may have problems getting the cooperation of the upper house when it comes to domestic policy. 

But the new prime minister will probably get his way with the central bank. With BoJ Governor Masaaki Shirakawa's term ending in April, Mr Abe will be able to select a successor more supportive of his desire for yet another round of quantitative easing. 


  • Calls legislation designed to limit the independence of the Bank of Japan in a way that would force it to ease monetary policy more quickly. 
  • Further backtracking on promises to end Japan's reliance on nuclear power.
  • Diplomatic efforts to improve relations with Beijing. 
  • Attempts to balance the budget through spending cuts rather than new taxes.

About Me

My name is Dr Bruce Gale and I am a senior writer with the Singapore Straits Times. I studied at  LaTrobe University (BA Hons) in Melbourne and later at the Centre for Southeast Asian Studies at Monash University (MA). My PhD thesis, which focussed on Malaysian political economy, was completed at the Malaysian National University (Universiti Kebangsaan Malaysia) in 1987.

From 1988 to 2003 I was Singapore Regional Manager for the Hong Kong based Political and Economic Risk Consultancy (PERC). 

I have written several books and articles on Southeast Asian affairs, including Political Risk and International Business: Case Studies in Southeast Asia (Pelanduk Publications, 2007). Books on language include Mastering Indonesian: a guide to reading Indonesian language newspapers (Pelanduk Publications, 2008)

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