Can the New Government Deliver?

Kishida Fumio took office as Japan’s prime minister on October 4, 2021. Shortly afterward, Kishida dissolved the Lower House on October 14. The LDP and junior coalition partner Kōmeitō won the general election held on October 31, obtaining 293 seats, just 13 fewer than the number held by the two parties before the election. Prime Minister Kishida formed his second cabinet on November 10, retaining all ministers from his first cabinet except the foreign minister.

His predecessor, Suga Yoshihide, had lasted only about a year as head of the ruling Liberal Democratic Party before being forced to step down as a result of losing popularity among the public. This summer another hurdle is waiting Prime Minister Kishida—the House of Councillors election. Can Kishida learn from Suga’s mistakes? Can he meet public expectations for swift policy action while maintaining his support within the party? With these questions in mind, we will review the events leading up to Kishida’s installation and his cabinet’s policy agenda.

Obstacles to Longevity

Over the past 15 years, short-lived cabinets have been the rule rather than the exception in Japan. In the six years from September 2006, when Prime Minister Koizumi Jun’ichirō stepped down, to September 2012, when Abe Shinzō formed his second cabinet, Japan had six prime ministers, each lasting roughly a year. Although Prime Minister Abe broke sharply from this pattern the second time around (setting a record for longevity), his successor, Suga Yoshihide, added to Japan’s growing list of short-term premiers.

Why have seven of the last eight Japanese cabinets failed in the space of a year? A number of factors can be adduced, but in most of these cases, they were hobbled by legislative gridlock owing to a divided Diet—that is, the opposition parties controlled the House of Councillors (upper house), making it extremely difficult for the government to advance its agenda. Since 2013, the LDP-led ruling coalition has controlled both houses of the Diet, but Kishida is undoubtedly aware of the fate that awaits him should the LDP-led ruling coalition lose its upper house majority in the summer 2022 election.

Kishida must also be cognizant of the reasons Suga himself proved vulnerable, even with the benefit of majorities in both chambers of the Diet. Lacking a solid base of power within the party, Suga needed a certain level of popular support to stay in office. Unfortunately, he forfeited the voters’ confidence with his tone-deaf pandemic policies.

Suga’s Missteps

The Suga cabinet enjoyed a relatively high public approval rating when it was formed in September 2020; in an Asahi Shimbun poll published on September 18, 2020, a full 65% of respondents registered their support for the new administration. The cabinet lost no time getting to work on the prime minister’s signature policies, including the establishment of a new “digital agency.” Suga also made a favorable impression in his first policy speech to the Diet (October 26), when he announced a bold national commitment to achieve net-zero greenhouse gas emissions by 2050.

Things went downhill rapidly after that, however, owing first and foremost to Suga’s unpopular and inconsistent response to the COVID-19 crisis. The perception gap between the cabinet and the public was apparent in three controversies that proved especially damaging to Suga.

Suga’s first major stumble was his decision to expand and continue the Go to Travel campaign, a program designed to revive domestic tourism and boost the economy through government-subsidized discounts on train fares, hotel accommodations, and so forth. The initiative was launched by the Abe cabinet in July 2020, after the first wave of infections had largely subsided, and it initially excluded travel to and from metropolitan Tokyo. On October 1, 2020, the Suga government removed that exclusion.

The timing could not have been worse: A third wave hit Japan early that month. As case levels rose over the next three months, so did doubts about the wisdom of promoting tourism in the midst of a pandemic. In an Asahi survey published on November 17, only 37% of respondents supported Go to Travel, while 51% opposed it. Still, Suga clung stubbornly to the program, compromising only by excluding certain hot spots in late November. Finally, in mid-December, with case numbers and criticism mounting, the government announced that the promotion would be suspended as of December 28. The cabinet’s approval rating plunged to 39% in an Asahi poll published on December 21, down from 56% the previous month.

Another source of frustration was the prime minister’s reluctance to declare a state of emergency after the third wave hit. In an opinion survey released by the Yomiuri Shimbun on December 28, a full 66% of respondents expressed their support for such a declaration. But it was not until January 7, 2021, that Suga imposed a limited state of emergency, yielding to calls from the governors of Tokyo and three neighboring prefectures.

The third flash point was the government’s decision to hold the Tokyo Olympic Games (originally scheduled for 2020) from July 23 to August 8, 2021. Public sentiment began to turn against the event after a fourth wave of infection hit Japan in mid-March. In a Kyodo News opinion survey released on May 16, close to 60% of respondents said that the summer games should be canceled. In an Asahi Shimbun poll published May 17, a full 83% of those surveyed called for cancellation or postponement of the games, and the same survey found a dismal 33% approval rating for the Suga cabinet. Despite these ominous signs, Suga persevered with his plans for the games, hopeful that popular sentiment would come around. In an Asahi poll published on August 9, the day after the closing ceremony, support for the cabinet had sunk to a perilous 28%.

In the end, it was the August 22 Yokohama mayoral election that delivered the coup de grace. Suga, whose own electoral district is in Yokohama, threw his whole-hearted support behind former National Public Safety Commission Chairperson Okonogi Hachirō, a longtime friend and close ally. Okonogi’s loss to a political novice supported by the opposition convinced many in the LDP that Suga would be a serious liability in the coming House of Representatives election, which was to be held no later than November.

The LDP’s Choice

With the LDP leadership election looming in late September, former Foreign Minister Kishida Fumio declared his intent to run for the top post, citing the need for party reform.

Suga struggled briefly to regain his footing, mulling the idea of a snap election and floating plans for a shakeup of the party brass—including Secretary General Nikai Toshihiro, who had engineered Suga’s election in 2020. These desperation moves backfired, and the prime minister’s remaining supporters scattered. On September 3, Suga announced that he would not stand for reelection as LDP president.

In the September 29 LDP election, Kishida faced three other candidates: vaccination czar (and former Foreign Minister) Kōno Tarō, former Minister of Internal Affairs and Communications Takaichi Sanae, and former Minister of Internal Affairs and Communications Noda Seiko. In the first round of voting, Kishida came out on top but failed to secure a majority; Kōno, who was favored in the public opinion polls, came in a close second. In the run-off, with voting limited to Diet members, Kishida beat Kōno by a margin of 257 to 170.

Several factors contributed to Kishida’s victory. First, he was better equipped than Kōno to articulate a platform, having been preparing his policies since the previous LDP election a year earlier. Kishida also benefited from the support of a number of party heavyweights: Former Finance Minister Asō Tarō and Amari Akira were both backers, and former Prime Minister Abe, while not exactly a fan, ultimately came down in Kishida’s favor after his preferred candidate (Takaichi) was eliminated. Overall, Kishida must have seemed like the safer choice to steer the party and the government ahead of the 2022 upper house election, having the guaranteed support of his own loyal faction as well as the endorsement of several top party bosses.

Kishida became prime minister on October 4 and dissolved the lower house just 10 days later. The LDP and Kōmeitō emerged victorious in the general election held on October 31, obtaining a comfortable majority of 293 seats, a loss of just 13 from their position before the election. On November 10 Kishida formed his second cabinet, swapping out only the foreign minister.

Now that he is back in the Kantei, the prime minister will tackle three items on his policy agenda: Japan’s pandemic response, the economy, and diplomacy and security.

A Gentler, Kinder Capitalism?

Where COVID-19 measures are concerned, Kishida has promised to operate on the principle of “preparing for the worst.” In November, his cabinet put together a comprehensive package of measures to respond to the pandemic as “to ensure the security of the people.” It included a pledge to expand the number of beds nationwide to enable hospitalization of 37,000 patients, an increase of 10,000 people from the third wave. It also increased the capacity of accommodating facilities for less severe cases by 14,000 rooms to a total of 61,000 rooms and further boosted the availability of free PCR testing.

Initially, Kishida’s cabinet planned making booster vaccines available to recipients eight months after they had their second shot. In December, though, the prime minister moved the timetable up for those engaged in medical services and elderly people in care facilities so that they could receive vaccinations six months after their second shots, while making it possible for other elderly people to get boosters after seven months had passed.

In terms of economic policy, Kishida has spoken repeatedly of the need to build “a new form of capitalism.” The underlying idea, as he explains it, is to create a positive cycle of growth and distribution, in which the fruits of economic growth are more equitably distributed, fueling further growth.

To stimulate Japan’s perennially sluggish economy and to promote economic growth, Kishida has been emphasizing the need for (1) stepped-up investment in science and technology, (2) development of “digital garden cities,” (3) further deregulation to expand renewable energy and increased investment in green energy to achieve carbon neutrality by 2050, and (4) a new focus on economic security. With regard to the distribution of wealth, the major aim for Prime Minister Kishida is to raise income of Japanese people. As initial steps, his cabinet will (1) boost the incomes of those working in the nursing, long-term care, and childcare sectors, where wages are regulated by the government, (2) reduce corporate tax for firms that have raised their workers’ wages, (3) introduce measures to promote human resource investment, and (4) design policies to raise incomes of younger generations and households with children.

On October 15, the cabinet established a new policy unit, the New Form of Capitalism Realization Headquarters, and a new panel, the Council of New Capitalism Realization. Both will be chaired by the prime minister. The panel will include notables from the private and academic sectors, including Kawabe Kentarō, president of Z Holdings, and the University of Tokyo economist Yanagawa Noriyuki.

The Kishida cabinet complied a supplementary budget for fiscal 2021 (ending March 2022) on November 26, 2021, and the Diet passed it on December 20. It further formed the budget for fiscal 2022 on December 24. The supplementary budget financed some key policies aimed at expanding investment in science and technology. First, it increased the government outlay for the University Fund by about ¥600 billion. This fund, with a total size of about ¥5 trillion, will start management by the end of fiscal 2021. The supplementary budget also provided about ¥774 billion to strengthen Japan’s semiconductor industry, as well as making ¥250 billion available for universities and private firms to conduct research to develop important technologies. The size of the education and science budget, which provides most of the government financial resources to fund sci-tech research at universities and national research institutions, has remained unchanged in the 2022 budget from the previous fiscal year.

Along with this promotion of the development of science and technology, Prime Minister Kishida attaches importance to economic security. His comments thus far make it clear that his concerns in this area center on two key challenges. One is building a supply chain resistant to disruptions, in some cases by reshoring production. Another is strengthening export controls and other measures to prevent sensitive goods and critical technologies from falling into the wrong hands.

With these challenges in mind, Kishida has tapped Kobayashi Takayuki for the new post of minister for economic security and Yamagiwa Daishirō as minister for economic revitalization. Kishida’s economic security team will most likely be rounded out by Takaichi Sanae, now chair of the LDP Policy Research Council, who called for the enactment of comprehensive economic security legislation during her unsuccessful run for the party’s top spot.

In the area of foreign policy and defense, Kishida is likely to follow the same basic policies hammered out by Abe and embraced by Suga. He remains committed to partnering with the United States, Australia, and India to defend such “universal values” as democracy, human rights, and the rule of law in a “free and open Indo-Pacific.” He has said that his government will be revising the National Security Strategy, National Defense Program Guidelines, and Medium-Term Defense Program in response to new security challenges. Two priorities will be enhancing the Japan Coast Guard and strengthening the nation’s missile defense capability.

Pivotal Policy Issues

With the explosion of the Omicron variant of COVID-19 and the increase in the number of new cases in recent weeks, the public and media have come to pay significant attention to government responses to the pandemic. Prime Minister Kishida now faces two main policy challenges. The first is the suppression of the pandemic and the second is presentation of some tangible achievements in the economic field before the House of Councillors election in July.

Given the serious concern held by most of the Japanese public regarding COVID-19, Prime Minister Kishida has to prevent further spread of the virus and make sure that medical institutions can continue to provide necessary medical services for those infected.

With respect to the economy, there are two issues. The first is whether the prime minister can present a clear path toward achieving his “new capitalism.” It will take time for Kishida to rack up accomplishments in most of the policy areas he has targeted to promote economic growth and distribution. But through discussions in the Council of New Capitalism Realization, he must at least come up with a road map that lets Japan reach this goal of combined economic growth and distribution.

The second issue in connection with his economic policy is the strength of his commitment to reform, including deregulation. It is possible to demonstrate clear accomplishments in the field of economic reform and deregulation to the eyes of the Japanese public.

Kishida’s call for a fresh take on capitalism, a major theme since he launched his bid for leadership of the LDP, seems to imply a dramatic shift in course. During a pre-election press conference held to explain his economic policies, Kishida promised “in a word, to switch course from the neoliberal policies dating back to the Koizumi reforms.” Such policies, he argued, “have generated a growing divide between the haves and the have-nots.”

At the same time, though, Prime Minister Kishida has yet to demonstrate the will to expend political capital on structural reforms. For example, in his October 8 policy speech to the Diet, words like reform were conspicuously absent, leading some critics to question whether structural change was really on the agenda. In his December 6 policy speech, his attitudes toward existing economic structures seem to have changed little, despite his use of the word “reform” twice.

He has, however, committed to digital, regulatory, and administrative reforms with his announcement of the launch of an ad hoc commission on digital administrative reform. The changes examined in this commission will center on revising restrictions in the existing administrative regulations, a regime that takes for granted the assumptions that all administrative applications are made with paper documents and various safety checks are carried out physically by human workers. By the time of the upper house election, the prime minister no doubt hopes he can demonstrate to the Japanese public how these reforms will promote economic growth.

In an opinion poll (published on October 6) conducted by the Yomiuri Shimbun on October 4–5, immediately after the formation of Kishida’s new cabinet, voters identified “business conditions and employment” and “COVID-19 countermeasures” as the areas where they had the highest hopes for action by the new government. In another Yomiuri poll conducted on December 3–5 and published on December 6, the cabinet’s approval rate picked up by 6 percentage points from November and recorded 62%, implying that Kishida has met public expectations in his first two months. The administration’s fate will hinge on whether it can continue to meet those expectations in the first half of this year.

(Originally published in Japanese. Banner photo: Newly installed Prime Minister Kishida Fumio enters the Kantei in Nagatachō, Tokyo, on October 4, 2021. © Jiji.)