Prime Minister Yasuo Fukuda abruptly resigned Monday less than a year after taking office, prolonging a period of political deadlock as the world's second-largest economy flirts with recession.
An immediate favorite to take over from Mr. Fukuda was Taro Aso, a former foreign minister who is now the secretary-general of the ruling Liberal Democratic Party. Mr. Aso, 67, is a sharp-tongued political fighter. Recent statements suggest that he would seek to boost the economy through spending measures instead of fighting the country's huge national debt.
Whoever takes over as Japan's fourth leader since 2006 will face structural woes in the economy, in particular the growing number of old people. That is placing a burden on the national pension and health-care systems, and the declining workforce makes it harder for the nation to boost its output.
With consumer confidence low, the economy is heavily dependent on exports for growth, meaning it suffers when other major economies slow, as they have over the past year.
Mr. Aso's victory would hardly guarantee stability. The LDP is under pressure from the opposition to disslove parliament and hold a snap election soon. The LDP could lose a number of seats, and even perhaps lose power to the opposition Democratic Party. That party has never held power, and its recent policy statements suggest it would return to public spending to aid weak regional economies.
Many Japanese would welcome a radical leader in the mold of former Prime Minister Junichiro Koizumi, but there are currently no candidates with the necessary combination of vision and political influence. Mr. Koizumi promoted deregulation and lower public spending while he was in office between 2001 and 2006.
His successors have been weak. Shinzo Abe, resigned after about a year in office, giving way to Mr. Fukuda. The public -- which once rallied behind Mr. Koizumi's policies -- has become increasingly anxious over the economic future. After the economy posted an annualized contraction of 2.4% in the April-June quarter, Mr. Fukuda tried to alleviate concerns with an old-fashioned solution. He announced an economic booster package Friday, including fiscal spending of some $16 billion.
On Monday, the 72-year-old Mr. Fukuda said: 'I made a decision to step down today because I believe we need to have a new leadership to achieve policy goals.'
The resignation was timed to give a successor time to prepare for a general election, which must be held by September 2009. Mr. Fukuda's cabinet has recently had approval ratings around 30%.
Neither the LDP nor the opposition appears to have the solution to Japan's problem over the past 15 years: slow growth. Many economists expect the economy to expand by less than 1% both this year and next.
Bankruptcies among smaller companies are increasing, as banks, hurt by the turmoil in the global financial market, tighten credit. Though some exporters have performed solidly even during past bad times, they are now suffering from the world economic slowdown.
Fujifilm Holdings Corp. said last week its group net profit for the year ending March 31, 2009 would drop 23% from a year earlier instead of increasing 5% as earlier forecast. The company cited slack economic conditions world-wide and higher energy and commodities prices.
Even the mighty auto industry has not been immune. Toyota Motor Corp. last week delayed its plans to become the world's first auto maker to sell more than 10 million vehicles annually, as sales to developing countries fail to offset losses in the crumbling U.S. market. Toyota reported a 28% drop in net profit for its fiscal first quarter.
Still, most economists think the current downturn will be shallow and not result in problems such as mass unemployment. That's because it is caused mainly by outside factors, such as slowing growth in Japan's main export markets and rising prices of energy and raw materials.
Japan's outstanding debt is equivalent to 148% of gross domestic product this year, according to the Ministry of Finance, compared with 62% in the U.S. The cost of servicing the national debt takes up roughly a quarter of the government's annual budget.
The slow growth means the central bank will likely keep interest rates low, despite rising inflation. The Bank of Japan's target for short-term interest rates is just 0.5% now, and a rise in this could trigger higher long-term interest rates, which would raise the cost of government debt servicing and hamper efforts to bring down the debt level.
The core consumer-price index, which excludes fresh food but includes energy products, rose 2.4% in July from a year earlier, the fastest pace in a decade.
The immediate cause of Mr. Fukuda's downfall was the erosion of the LDP's power after it lost control of parliament's upper house in an election last year. Though the ruling coalition controls the more-powerful lower house, the upper house can delay legislation and veto key appointments.
The Democratic Party used its new power to frustrate Mr. Fukuda's government, with the aim of forcing him to call a general election. Because of this, Japan had to temporarily drop out of a mission to refuel ships operating in the Indian Ocean as part of a U.S.-led operation in Afghanistan. Earlier this year, Japan's central bank was left without a governor for weeks after the Democratic Party vetoed several candidates put forward by Mr. Fukuda. One of the vice-governor positions remains vacant.
Trying to fight back, Mr. Fukuda overhauled his cabinet a month ago, and appointed a number of new ministers in key positions such as finance and economy. His economic stimulus package last Friday was billed as an $106 billion plan. But the government's high debt meant that he could only promise some $16 billion in spending on it for the current year.
On Monday, Mr. Fukuda expressed frustration that his efforts to pursue important policies were repeatedly hampered by the opposition. But he didn't say when the resignation would take effect, signaling that he would stay in office until the LDP selects a new leader. The party must hold an internal election to decide on its new chief, a process that can take weeks.
Mr. Fukuda was born into a political family, but was too modest and unassertive to be a natural politician. His father served as prime minister between 1976 and 1978.
As prime minister, Mr. Fukuda called his first administration the 'back against the wall' cabinet, and he immediately struggled. Still, he scored some diplomatic successes, which can be put down in part to his will to improve Japan's relations with neighbors such as China. In May he received Chinese President Hu Jintao in Tokyo, the first visit by a Chinese head of state to Japan in a decade, and in June, the countries made a breakthrough in a long-running dispute over sea territory, when they agreed to jointly develop offshore natural-gas fields.
Yuka Hayashi / Sebastian Moffett
[ 本帖最后由 shunitang 于 2008-9-3 09:46 编辑 ] |
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