Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business and the world
Japan’s Sanae Takaichi has promised to increase defence spending to hit a target of 2 per cent of GDP two years ahead of schedule, as the newly installed prime minister prepares for a visit to Tokyo next week by US President Donald Trump.
“We need to proactively strengthen the foundation of our defence capabilities,” said Takaichi, who was inaugurated as Japan’s first female prime minister this week, in her first parliamentary speech as national leader on Friday.
Alongside a catalogue of policy pledges that prioritised fighting inflation and boosting growth, Takaichi said her government would aim to reach its target of increasing defence spending to 2 per cent of GDP in the current fiscal year to March.
Tokyo in 2022 set a target of increasing the ratio of defence spending from the previous roughly 1 per cent by March 2027.
The comments from Takaichi, who has repeatedly warned about the security situation in the Indo-Pacific region, drew a swift complaint from China.
“We urge Japan to deeply reflect on its history of aggression, commit itself to the path of peaceful development, act prudently in military and security areas, and avoid further losing the trust of its Asian neighbours and the international community,” Beijing’s foreign ministry said.
Takaichi’s announcement, though in keeping with her hawkish reputation on defence, was described by political analysts as a pre-emptive move ahead of the visit by Trump, who has already pressured Nato allies to agree to raise defence spending to 5 per cent of GDP.
Takaichi has signalled that she wants to begin a broader security strategy overhaul by the end of the year.
Trump’s visit to Japan next week is expected to include a visit to the Yokosuka US naval base near Tokyo — a prospect that has triggered speculation Japan will unveil a significant US-focused investment in shipbuilding and ship repair.
True to her campaign promises and her reputation as a fiscal dove, Takaichi said she would use government spending to spur growth.
The policy speech, in which Takaichi used the phrase “strong economy” six times, was focused on measures to ease the burden of rising prices — an issue that has angered large parts of the electorate and sucked votes away from the LDP and towards populist parties.
“We will turn anxiety about the future into hope and pave the way for growth,” she said.
“The strategic deployment of fiscal measures will increase household income, improve consumer sentiment, raise corporate earnings, and produce higher tax revenues without increasing tax rates,” Takaichi said.
She did not give details of the scale of the proposed stimulus package, but Takaichi’s new finance minister, Satsuki Katayama, indicated to reporters earlier on Friday that the government would consider issuing more debt in order to cover the additional spending.
Recommended
Since Takaichi won leadership of the ruling Liberal Democratic party in early October, setting her on a path to the prime minister’s office, the yen has tumbled by about 4 per cent against the US dollar.
The Nikkei 225 stock average, bolstered by the promise of government stimulus, ended the week close to an all-time high. The yield on Japan’s benchmark 10-year government bond held steady from Thursday’s close at 1.655 per cent.
AloJapan.com