New leader seeks to stimulate economy by wealth distribution, including cash handouts to people hurt by the pandemic
TOKYO—Japan’s new prime minister, Fumio Kishida, called for more aggressive distribution of wealth to those with lower and middle incomes, including possible new cash handouts for people suffering during the pandemic.
Mr. Kishida spoke at a news conference Monday hours after he was elected prime minister by Japan’s Parliament. The 64-year-old former foreign minister was elected head of the ruling Liberal Democratic Party on Sept. 29, assuring his elevation to prime minister.
While he hasn’t proposed any sharp departures from the policies of his predecessors, Mr. Kishida has taken a more liberal tone, in the American sense of the word, on the economy. He says the world’s third-largest economy has a widening rich-poor gap that needs to be closed through distribution of wealth to those who are falling behind.
“We need to create an environment where the fruits of growth are properly distributed,” he said at the news conference.
Mr. Kishida said he would consider cash handouts to single mothers, workers without steady jobs and others suffering during Covid-19. Last year the government distributed nearly $1,000 to every resident. He also said his government would look at tax breaks for companies that use their cash stockpiles to raise workers’ salaries rather than only raising dividends.
He has said that if lower-income people have more cash in their pockets, it will stimulate consumer spending. However, any push to limit corporate dividends could hurt the stock market, which rose sharply between 2012 and 2020 when Shinzo Abe was prime minister.
The stimulus plans are likely to figure prominently in Mr. Kishida’s campaign this month to keep the Liberal Democratic Party’s majority in Parliament’s lower house, the more powerful of the legislature’s two chambers. Mr. Kishida said the lower-house election would take place Oct. 31.
Japan’s economy has recovered slowly from the Covid-19 pandemic, as repeated states of emergency this year have held back consumer spending on travel, restaurants and entertainment. The country’s gross domestic product in the April-to-June quarter remained more than 3% below the peak it reached in the third quarter of 2019.
Recently signs have improved, although they were too late to save the unpopular government of former Prime Minister Yoshihide Suga, who said in early September that he would step down. The seven-day rolling average number of Covid-19 infections has fallen more than 90% from an August peak, allowing the government to lift a state of emergency last week. Shopping districts and restaurants were crowded over the weekend as voluntary curbs on businesses were eased.
Sentiment among Japan’s large manufacturers improved to the highest level in nearly three years in the Bank of Japan’s quarterly survey released Friday, helped by the global economic recovery.
Mr. Kishida has said he wants an economic stimulus valued at several hundred billion dollars to lift the economy back to normalcy.
“Kishida is keen to support the Japanese middle class by subsidizing housing and education expenses, which should lead to an increase in consumption,” said Naoya Oshikubo, an economist at Sumitomo Mitsui Trust Asset Management.
The ruling party’s new policy chief is Sanae Takaichi, who ran an unexpectedly strong campaign for party leadership against Mr. Kishida with backing from former Prime Minister Shinzo Abe. Ms. Takaichi has positioned herself as the heir to Mr. Abe’s pro-growth Abenomics policies and has said Japan can issue debt freely to finance its Covid-19 recovery and other priorities as long as inflation doesn’t exceed the Bank of Japan’s 2% target. Recently consumer prices have been roughly flat.
Original article: https://www.wsj.com/articles/fumio-kishida-is-elected-prime-minister-of-japan-11633323689
