By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
February 2, 2026
Prime Minister Sanae Takaichi’s February 8th call for a snap election in the House of Representatives has dealt a blow to the campaigns of those parties that did yet have a fully built policy platform to present to voters. The only recourse for these campaigns has been to contest details about the consumption tax cut or about minor defense and foreign policies. Parties with populist agendas are exploiting public concern about the swelling number of foreign visitors. The campaigns are already in the second half.
The central feature of this campaign season is not policy debate, however, but the prospect that Japan may endorse its first female prime minister – and perhaps by a wide margin. News organizations have conducted several polls to predict the possibility that the Liberal Democratic Party (LDP) may achieve a simple majority in the Lower House, obviating the need for a coalition partner.
A poll by the Asahi Shimbun (telephone and online survey of approximately 370,000 people between January 31 and February 1) indicated a significant surge of support for the LDP that would take it from its current 196 seats to between 270 and 280. The media’s treatment of the campaign as a horse race – a phenomenon well known in other countries – has superseded meaningful discussion of policies that will determine Japan’s near-term future.
Management of Public Finances
The LDP has presented a campaign platform with five planks: 1) a strong economy, 2) the local community as the engine of Japan’s economy, 3) responsible defense and diplomacy strategies to strengthen the international order, 4) financial security for every generation and responsibility for future generations, and 5) a new constitution compatible with contemporary Japan. Of these, Takaichi has focused on the economy and defense policy.
The catchword for the Takaichi campaign is “responsible and proactive public finances.” What does “responsible” or “proactive” mean? Observers suppose that “responsible” means a national budget not dependent on the issuance of governmental bonds and that “proactive” means investments for the future. Takaichi thus promises that her administration will manage public finances without an excessive issuance of Japanese government bonds (JGBs).
But even during her so-far brief period as prime minister, Takaishi has favored more JGBs. Her FY2025 supplemental budget from last December totaled ¥18.4 trillion last December. The principal source of funding (63% to be precise) was the issuance of ¥11.4 trillion in JGBs. The FY2026 budget bill will set a spending record of ¥122.3 trillion, funded in part by the issuance of ¥29.5 trillion in JGBs, but it has not been discussed in the Diet yet as a result of Takaichi’s dissolution of the Lower House.
The LDP platform explains that “responsible and proactive public finances” means “producing a positive cycle in which further investment is possible through the sustainability of public finances, powerful economic growth and an increase in tax revenue.” The LDP aims to improve the balance of governmental debt against Japan’s GDP. Takaichi claims that she will begin fundamental reform of public finances by ending the annual tradition of a supplemental budget.
However, the prime minister has not proven her capacity to communicate smoothly with the markets. Reflecting investors’ fundamental concerns about Takaichi’s budget deficit, the market for long-term bonds has been declining ever since she took office last October. The rate on 10-year JGBs has steeply risen 60 basis points from 1.6 percent in late October to 2.2 percent in late January 2026. When she referred to exporters’ prosperity with yen’s depreciation, Japanese yen suddenly dropped against dollar early February. So far, there is little to suggest that Takaichi can implement her budget proposal “with the confidence of the markets.”
The opposition parties have not built a counterargument to Takaichi’s public financing plan. They have instead focused on such granular issues as whether a consumption tax cut should cover all consumption or be limited to foods, and whether the cut should be permanent or limited to two years. While most parties have not produced a plan to offset the decrease in revenues from a consumption tax cut, the Centrist Reform Alliance (CRA) proposes to establish a governmental fund to cover the tax cut. Takaichi has not identified any fiscal resource to substitute for a consumption tax cut.
Diplomacy at the Center of the World
“We will resume our diplomatic standing at the center of the world by restoring the power of the economy and our defense systems,” says the LDP platform. It is not clear that in the last 80 years Japan has ever stood at the center of the world or shaped it in any significant way. The best guess is that Takaichi wants to revive former prime minister Shinzo Abe’s policy that Japan “flourish at the center of the world.”
There is nothing new in the content of her foreign policies. The LDP platform calls for strengthening relations with allied countries and the global south through shared values based on a “Free and Open Indo-Pacific.” This policy incorporates the concepts of freedom, democracy, and rule of law. The platform cites as an example the Abe administration’s solution to the abduction of Japanese citizens by North Korea.
The LDP platform also stresses constructive and stable relations with China, but Takaichi has already worsened the relationship with her careless comment in November on the Taiwan contingency. Since then, the Japanese economy has suffered. China has taken counter actions, including advising its citizens not to travel to Japan and banning exports of dual use items to Japan. The Chinese have also indicated that they may restrict exports of rare earth minerals.
On other national security issues Takaichi has discussed defense spending in the context of active public investment in economic growth. The LDP platform proposes revisions to three national security documents and the removal of regulations covering exports of defense equipment. Takaichi also hopes to revise the three anti-nuclear principles that now prohibit Japan from possessing, producing, or introducing nuclear weapons.
The CRA has pointed out that the LDP’s hawkish coalition partner, the Japan Innovation Party (JIP), is behind these national security planks, and the CRA emphasizes its support for an exclusively defense-oriented policy. But the party is still explaining why it turned away from the traditional position of the Constitutional Democratic Party of Japan, which opposed Abe’s 2015 security legislation to maximize Japan’s exercise of its right to collective self-defense.
Populistic Agenda for Foreigners
Some parties embrace xenophobic policies that would regulate foreigners, as if to say that Japan is suffering from a foreign invasion. But wide-ranging restrictions on foreigners are not feasible because the Japanese economy depends heavily on foreign workers and travelers. As a result, any new restrictions on foreigners would replicate traditional measures for travelers and immigrants.
The LDP would impose stricter controls on immigrants, a tax on foreign citizens, and a prohibition on real estate acquisitions by foreign investors. JIP and Sanseito are proposing an anti-spy act although such legislation could violate the privacy of Japanese citizens. Pressured by these two right-wing parties, Takaichi has said that she will protect privacy by strengthening governmental oversight of the legislation by establishing a new organization equivalent to the U.S. Central Intelligence Agency.
Japan’s economy is in fact highly dependent on foreign citizens. The Japanese government introduced a new system for foreign workers to make up for the shortage of Japanese labor brought about by Japan’s low birth rate. Foreign staff run most convenience stores in Tokyo. Foreign travelers and their heavy luggage regularly crowd trains in urban areas. These phenomena do not require xenophobic measures, but rather proper information for foreign visitors on how to abide by customs in Japanese society.
The CRA argues that it will establish an environment in which the Japanese and foreigners can live comfortably and with mutual respect. Although, as a practical matter, there are not many things that the Japanese government can do to reduce foreign presence, parties that say they will do something about it, like using the rallying cry, “the Japanese first,” are attracting voters. And voters supporting these attitudes are likely to help propel the LDP and its allied parties to garner a super majority of over 261 seats in the Lower House guaranteeing Takaichi’s premiership.
