Japanese opposition: "Profligate fiscal policy" vs Takaichi: "Fiscal soundness requires growth"

Korea Economic Daily

Summary

Noda pointed out that the scale of the Japanese government's first economic package is very large and said the recent rise in government bond yields is a warning about profligate fiscal policy.
Takaichi emphasized fiscal sustainability, insisting that without economic growth fiscal soundness cannot be achieved.
On the weak yen, Takaichi said exchange rate trends are determined by factors such as fundamentals or speculative moves, and the government will take necessary measures.

Prime Minister Takaichi's first debate with an opposition leader

On China-Japan tensions: "I will build a good relationship through dialogue"

On criticism of a weak yen: "Necessary measures by the government"

President Lee Jae-myung and Japanese Prime Minister Sanae Takaichi are smiling brightly and shaking hands before a summit at the HICO Gyeongju in Gyeongbuk on the 30th. Photo = Kim Beom-jun, reporter for The Korea Economic Daily

Japanese Prime Minister Sanae Takaichi said on the 26th that she would "build a good relationship through dialogue" regarding China, with which tensions have recently been rising.

According to the Nihon Keizai Shimbun, Prime Minister Takaichi held a debate with an opposition leader in the Diet for the first time since taking office. Yoshihiko Noda, leader of the Constitutional Democratic Party, pointed out that Japan-China relations had cooled due to Takaichi's remark suggesting intervention in the event of a Taiwan contingency. He pressed her, asking, "Wasn't that unilateral action? Do you feel any responsibility?"

On the 7th, Takaichi mentioned at the House of Representatives Budget Committee that in the event of a Taiwan contingency, Japan might be able to exercise collective self-defense under a "situation in which the nation's existence is threatened." China has since forcefully pushed Japan to retract the remark. In response to Noda's questioning, Takaichi said, "I will build a comprehensive good relationship through dialogue," adding, "Maximizing national interests is my responsibility."

Noda criticized, "There are things you should not say as the highest commander of the Self-Defense Forces," and said again, "Carelessly stating one's personal views is reckless." Takaichi defended her earlier remark, saying, "I was asked about a concrete case and answered sincerely within that scope." On recognizing a situation that threatens existence, she explained, "I will assess all information comprehensively depending on individual, specific circumstances."

Takaichi stated she does not recognize Taiwan's legal status. She said, "We maintain non-governmental practical relations with Taiwan," and noted, "Under the Treaty of San Francisco, Japan relinquished all rights and claims with respect to Taiwan."

Noda pointed out that the Takaichi administration's first economic package, prepared at about 21.3 trillion yen, is "extremely large." He added that the recent rise in government bond yields is "a warning about profligate fiscal policy." Takaichi denied this and emphasized, "What I consider most important is fiscal sustainability." She insisted, "Unless we create a growing economy, fiscal health will never be restored."

Noda described the continuing weakness of the yen after Takaichi's inauguration as the "Takaichi weak-yen." He argued that a weak yen raises import prices and fuels inflation, and asked whether she would take the market's warning seriously. Takaichi replied, "I have nothing to say about exchange rate trends from my position." She added, "We will monitor whether movements are based on fundamentals or speculative behavior and, as the government, take necessary measures."

Tokyo = Kim Il-gyu, correspondent black0419@hankyung.com