With an eye to the Dec. 16 general election, following the dissolution of the Lower House on Nov. 16 by Prime Minister Yoshihiko Noda, leaders of the ruling Democratic Party of Japan and main opposition Liberal Democratic Party are already touting their economic policies.
Their policies show differences in regards to nuclear power and public works projects.
“The economy is in a tough situation,” Shinzo Abe, LDP president, said at a meeting with representatives from the Japan Chamber of Commerce and Industry on Nov. 15.
“It is expected that a new government that has won the confidence of the people will formulate a budget in a responsible way and make supplementary budgets in a bold manner,” Abe continued.
The pillar of the LDP’s economic policies is public works projects. To end the current cycle of deflation, Abe stressed that the emphasis on public works is “the right choice in terms of the macro economy.”
The LDP believes stimulus measures should come first and fiscal reconstruction should follow.
In the energy field, the LDP, with close ties to the business community, which mostly supports maintaining nuclear power generation, criticizes the government, led by DPJ leader Noda. The government is advocating no nuclear power by the 2030s, which differs from the LDP's stance.
“There is the need for efforts to promote renewable energy,” Abe said. “But I do not make an irresponsible declaration like zero reliance on nuclear power in three decades, as did the DPJ.”
Noda showed eagerness to press ahead with his policies to revitalize the country at a meeting of the government's Council on National Strategy and Policy held at the prime minister’s office on Nov. 15.
“There is the need to steadily implement the strategies to revitalize Japan, during the process toward vibrant growth,” the prime minister said.
Noda then called on his ministers to incorporate those ideas into economic measures to be compiled by the end of November and make them key items in the fiscal 2013 budget plan.
The revitalization plan features three fields called “Green,” “Life” and “Agriculture, Forestry and Fisheries." The Green initiative chiefly aims to promote the use of renewable energy sources. The Life field is to nurture advanced medical care and study, such as research into induced pluripotent stem cells.
The Green area is a key policy to be conducted in tandem with the policy of breaking with nuclear power by the 2030s.
At the meeting of the council on national strategy, Seiji Maehara, minister in charge of national policy and economic and fiscal policy, unveiled the criteria for priorities in the revitalization plan.
At a news conference after the meeting, Maehara raised the difference in economic policy from the LDP and its emphasis on public works projects.
“It will become a major issue whether to return to the pork-barrel spending done by the LDP, or choose the ‘Green’ and ‘Life,’ ” Maehara said.
To help jolt the economy out of deflation, both parties are urging the central bank to further ease credit. They are, however, aware of the limitations with stimulus measures taken by a government saddled with huge debts.
On the foreign exchange market, the dollar briefly rose above 81 yen for the first time in six and a half months on Nov. 15.
Observers believe the yen's weakening was triggered by Abe’s strong remarks in a speech, “We will take bold measures in monetary easing in coordination with the Bank of Japan,” and “It is not until unrestricted easing of monetary policy is done that the markets will respond.”
Because a weak yen benefits Japanese exports, stock prices took an upward turn on the same day.
Though the markets responded to Abe's remarks, calls for aggressive monetary easing are nothing new. Also, on the DPJ side, Maehara and other members have been pressing the BOJ to further ease credit.
In late October, the government and the BOJ issued a rare joint statement that said both bodies would pursue a path of action to pull the nation out of deflation.
“The direction we have taken may be the same as Abe’s, but deflation has long continued since the LDP held power,” Maehara said at the Nov. 15 news conference.
(This article was compiled from reports by Minoru Nagata, Ken Sakakibara and Yukio Hashimoto.)
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