TOKYO: Japanese Prime Minister Fumio Kishida announced on Wednesday, August 14, that he will not seek re-election as the leader of his party, effectively ending his tenure as prime minister in September after nearly three years in office. The ruling Liberal Democratic Party (LDP), which has governed Japan almost continuously since 1945, is set to hold an internal leadership contest next month. The party has seen a decline in popularity due to rising prices.
Kishida stated at a press conference in Tokyo, "In this upcoming party presidential election, it is essential to demonstrate to the public that the LDP is undergoing change and that we are presenting a revitalized party." He emphasized the importance of "transparent and open elections, as well as free and vigorous debate," adding, "The most evident initial step to show the LDP's commitment to change is for me to step aside. I will not be running in the forthcoming presidential election."
He further remarked, "Politics cannot function without public trust. I will now focus on supporting the newly elected LDP leader as a rank-and-file member of the party." According to reports from national broadcaster NHK and Kyodo News, Kishida had informed senior administration officials of his decision prior to the public announcement. In Japan, the head of the ruling party traditionally also serves as prime minister.
Kishida, aged 67, has been in office since October 2021. However, both his and his party's approval ratings have plummeted due to rising prices affecting Japanese households and a series of scandals. In an effort to counteract the impact of inflation and salvage his leadership, Kishida announced a 17 trillion yen stimulus package in November last year (equivalent to over US$100 billion at the time). Despite this effort, he remained unpopular among voters in the world's third-largest economy and within his own party.
Kishida also faced public dissatisfaction due to wages failing to keep up with the rising cost of living, as Japan emerged from years of deflationary pressure. In addition to inflation—an unfamiliar and unwelcome issue for Japanese voters—economic growth has faltered, with the economy contracting by 0.7 percent in the first quarter. Although there has been some recovery in recent weeks, the yen remains one of the world's weakest-performing currencies, benefiting exporters but simultaneously increasing import costs.
Kishida's public support has been declining further amid revelations of the LDP's connections with the controversial Unification Church and unrecorded political donations made at party fundraising events. "An LDP incumbent prime minister cannot run in the presidential race unless he's assured of a victory. It's akin to the grand champion yokozunas of sumo—you don't just win, you need to win with grace," said Koichi Nakano, a political science professor at Sophia University.
Kishida's decision to step down initiates a leadership contest within the LDP, which will determine not only the party's president but also Japan's next prime minister, overseeing the world's third-largest economy. His successor will face the challenge of uniting a divided ruling party while addressing rising living costs, escalating geopolitical tensions with China, and the potential return of Donald Trump as U.S. president in the coming year.
Kishida theoretically could have remained in office until 2025, with speculation that he might call a snap election to bolster his position. However, NHK reported increasing concern within the LDP that the party would fare poorly in elections under Kishida's leadership, following the loss of three by-elections in April. Kishida, who survived a pipe-bomb attack unscathed last year, has also been under heavy criticism for a major kickbacks scandal linked to party fundraising events.
According to Nakano, Kishida's decision to step down reflects his awareness that he would lose the leadership battle. "He has failed to consolidate support within the LDP," Nakano told AFP, adding, "For an LDP leader, staying in power for three years is longer than the average."
Prior to Wednesday's announcement, several figures were mentioned in local media as potential challengers to Kishida, including digital minister Taro Kono and economic security minister Sanae Takaichi. The Yomiuri Shimbun daily reported that some LDP members are optimistic about Shigeru Ishiba, former party number two, and Shinjiro Koizumi, former environment minister and son of ex-premier Junichiro Koizumi.
As Japan's eighth-longest serving post-war leader, Kishida guided the country out of the COVID-19 pandemic with significant stimulus spending. He also appointed Kazuo Ueda, an academic charged with unwinding his predecessor’s radical monetary stimulus, as head of the Bank of Japan (BOJ). In July, the BOJ unexpectedly raised interest rates as inflation took hold, contributing to stock market instability and causing a sharp decline in the yen.
Kishida's departure could lead to tighter fiscal and monetary policies, depending on who succeeds him. Shoki Omori, chief Japan desk strategist at Mizuho Securities in Tokyo, warned, "In short, risk assets, particularly equities, will likely be hit the most."
In another break from the past, Kishida also eschewed corporate profit-driven trickle-down economics in favour of policies aimed at boosting household incomes, including wage hikes and promoting share ownership.
Despite that departure on the economy, he stuck with the hawkish security policies of his predecessor Shinzo Abe, who was assassinated in 2022.
He unveiled Japan's biggest military build-up since World War II with a commitment to double defence spending, aimed at deterring neighbouring China from pursuing its territorial ambitions in East Asia through military force.
With prodding from Washington, Kishida also mended Japan's strained relations with South Korea, enabling the two countries and their mutual ally, the US, to pursue deeper security cooperation to counter the threat posed by North Korea's missile and nuclear weapons programs.
"Under Prime Minister Kishida’s steadfast leadership, Japan and the United States have ushered in a new era of relations for the Alliance," US Ambassador Rahm Emanuel said in a post on X, formerly known as Twitter.
Kishida has sided decisively with Ukraine since Russia's invasion, welcoming President Volodymyr Zelenskyy to a Group of Seven summit in Hiroshima and visiting Kyiv.
Under Kishida, Japan also pledged to double its defence spending to the North Atlantic Treaty Organization standard of 2 per cent of gross domestic product by 2027.
Encouraged by the US as the two countries seek to confront an increasingly assertive China, this marked a major change for Japan from decades of strict pacifism.
US President Joe Biden hosted Kishida at the White House in April when the two countries announced a "new era" in cooperation.
Japan and the Philippines in July signed a defence pact allowing for the deployment of troops on each other's territory.
On climate, Kishida promised at COP28 in December that Japan would build no new coal power stations that were "unabated", or lacked measures to reduce emissions.
Critics said that the necessary technologies, such as "co-firing" coal with ammonia or capturing and storing emissions, were unproven on a large scale.
