Fumio Kishida will be the next prime minister of Japan after winning a leadership battle in which the ruling Liberal Democratic party staked its future on stability instead of gambling on a new generation of leaders.
The victory in a tightly contested race on Wednesday marks a stunning comeback for the 64-year-old former foreign minister whose political fortunes were crushed following his defeat to Yoshihide Suga in last year’s LDP leadership tussle.
But Kishida’s win is a blow for a younger generation of party members, who had hoped that the leadership contest would herald a generational change and a break from the opaque factional politics that have defined Japanese politics for decades.
The vote on Wednesday dragged into the second round after none of the four contenders managed to clinch a majority in the first round.
Kishida won 256 votes of the 762 ballots cast by MPs and rank-and-file party members, while Taro Kono, the vaccines minister, garnered 255 votes. The early result was a disappointment for Kono, the candidate with the strongest support from the public and the younger generation. He came third in terms of votes from MPs alone.
In the second round, in which MPs dominate the vote, Kishida comfortably beat Kono by clinching 60 per cent of the ballots as senior LDP parliamentarians from powerful factions flocked to his side to ensure continuity and predictability in policy.
With little public support on his side, however, Kishida’s victory was unlikely to ease investor fears that Japan was returning to a chaotic period of rotating premierships following nearly eight years of stability under Shinzo Abe.
Japanese stocks, which jumped to a 30-year high in the days that followed Suga’s resignation, dropped heavily on Wednesday after it became clear that Kishida would be the next prime minister.
Kishida, who is expected to be appointed prime minister on Monday, will not have much time to settle in before a general election that must be held by the end of November.
During his campaign, Kishida promised to shift away from the neoliberal approach of deregulation taken by his predecessors and promised a more equitable distribution of wealth.
But analysts said he was unlikely to veer significantly from the Abenomics programme of aggressive monetary and fiscal stimulus in the near-term as the country dealt with the fallout from the coronavirus pandemic.
In early September, Suga abruptly announced he would not seek re-election in the LDP leadership race after his popularity plummeted because of his handling of Covid-19. He served only one year in office.
Since then, vaccination rates have risen and new Covid cases have declined, prompting the government to announce a lifting of a state of emergency across all areas of Japan for the first time since April.
On the foreign policy front, Kishida is expected to continue Japan’s close security alliance with the US while increasing its defence capability and spending to counter a more assertive China.
Traders said that, while the focus of domestic investors would now shift to issues such as the reopening of the economy and stimulus measures, foreign investors who own roughly a third of the Japanese market and represent 60 per cent of daily volumes, had probably favoured the more internationalist Kono.
“The market doesn’t like the result — foreigners do love an English speaker,” said CLSA strategist Nicholas Smith, referring to Kono.
Both the Topix and Nikkei benchmarks had been trading lower during Wednesday, but dived in the final 30 minutes of trading to close 2.1 per cent and 2.2 per cent lower respectively.