Below Decks in Katsuyama: Continuity in the Cabinet, Ishin Takes a Chair, and New York Before Xi
Good day from Katsuyama. Happy Silver Week, if you can see it through the rain. Typhoon Dwan, number 25 of the season, is large and strong. It will skirt Kanto rather than hit it square, with the worst of it Monday into Monday evening, and the skies should be glorious on Tuesday for Respect for the Aged Day. September is the month Japan usually takes the hammer. Chiba and Akita have already had the torrential end of it. I had hoped the five-day stretch would get me out to the islands. Instead I am hunkered below decks again, preparing the boat, while the seas in front of me are still calm.
The cabinet PM Takaichi named on Wednesday is more of the same than a correction. Ten of the eighteen chairs turned over. Seven of those ten are first-time ministers. The top of the ticket held. She leaves tonight for Washington and the UN General Assembly, three days on the ground, and is back Thursday into a two-day working week. She speaks late Tuesday. President Trump speaks first that morning and is scheduled to stay for a meeting on the sidelines. President Xi arrives Thursday for a three-day state visit, the first by a Chinese leader in more than a decade. An extraordinary Diet opens on October 5th. That session has to carry the food-tax cut and the 45-seat promise to Ishin.
A Cabinet of Continuity
PM Takaichi kept Chief Cabinet Secretary Minoru Kihara, Finance Minister Satsuki Katayama, Foreign Minister Toshimitsu Motegi, and Defense Minister Shinjiro Koizumi. Ryosei Akazawa stays at METI, Minoru Kiuchi at economic revitalization, and Kimi Onoda at economic security. Katayama now also carries the consumption-tax file. Koizumi already had a call on Friday with Defense Secretary Pete Hegseth. The two of them have met something like seventeen times since they both took the job.
The party side barely moved. Taro Aso is still LDP vice president. Shunichi Suzuki, his brother-in-law, is still secretary-general. Koichi Hagiuda stays as deputy secretary-general. Takayuki Kobayashi stays as policy chief. Aso’s faction has 61 members and one cabinet chair. Motegi’s group has 42 and is heavy inside the ministries. That looks like the trade. Aso keeps the election machine. Motegi keeps the administrative depth. PM Takaichi does not love the arrangement. It is the deal that put her in the job.
Hisayuki Fujii takes Internal Affairs from Yoshimasa Hayashi. Takashi Yamashita is at Justice. Yoshihiro Seki takes Education and Kazuo Yana takes Agriculture, the first slush-fund lawmakers put into a cabinet since 2023. Both are former Abe-faction bigwigs. Both have been elected twice since the books were opened. A Jiji poll taken before the photograph found 68 percent opposed the pairing, including a majority of LDP supporters. That is the attack line waiting in October. Goshi Hosono, once a DPJ cabinet minister, takes Reconstruction, his first chair since he joined the LDP. At the staircase photograph the prime minister beckoned him from the back row to stand beside her. The press corps noticed.
Yasuhiro Hanashi returns as chair of the National Public Safety Commission. Toshiharu Furukawa takes the rebuilt digital portfolio. Tatsunori Ibayashi is at Transport and Hiroyoshi Sasagawa at Environment. There are no new women. Katayama and Onoda are still the only two besides the prime minister. She did not take that bait. She said she wanted people aligned with what she is trying to do.
Onoda’s second-office problem from the 2022 Upper House race was not fatal. The two slush-fund chairs were not fatal either. The working read from the boat is that she will take the hit for people she thinks she can rely on.
She sent a questionnaire to members who had won at least two elections and spent three weekends with Kihara going through the answers. Kishida received one and did not fill it in. Hayashi received one and left the interesting boxes blank. That is a new way to pick a cabinet now that the factions no longer hand her the list.
Ishin Comes Inside
Hiroshi Nakatsuka, 70, secretary-general of Ishin and the member for Osaka 11, takes the minister-of-state chair for regulatory and administrative reform. It is not finance and it is not a line ministry with a budget and a building full of bureaucrats. It is a special-mission seat. When she read the names she put him first, a nod to the coalition. Neither Nobuyuki Baba nor Fumitake Fujita got the chair people had been floating. Five of the roughly fifty sub-cabinet posts go to Ishin, two of them at state-minister rank, including Alex Saito at Internal Affairs. Ishin asked for five sub-cabinet jobs and two vice-ministerial chairs. That is roughly the deal they got.
The 10 percent cut in Lower House seats, 45 chairs, is the other half of last summer’s price. The ministries that actually write that bill now have Ishin people sitting in them. Combined with Ishin she can push the Lower House. She still cannot, on present numbers, push the Upper House the same way. The coalition is short at least four votes there.
Hayashi Loose, and a Fight in the Upper House
Hayashi left the cabinet. It was as much his decision as hers. She would rather have kept him handcuffed inside than have him out talking about how the 8-to-1 food-tax cut should be paid for. He came third in the last LDP presidential race, behind Koizumi, and wants his 47-prefecture tour back, and he can take it. He does not need cabinet approval to do that and will find company. Yuichiro Tamaki’s Democratic Party for the People is now the largest opposition force in the Diet, still in the low single digits, and the food tax is the fight Tamaki wants.
Junichi Ishii was the LDP’s Upper House secretary-general. He could not close that chamber for the budget in April. It ran four days over. PM Takaichi has put Kazuhiko Aoki in the job, son of an old Upper House don. Ishii collected friends while he had the post. She needs every vote she can generate in that chamber in October. It could be a battle of nerves.
Eight to One, Still the October Fight
The draft takes food from 8 percent to 1 percent for two years from April 2027. The cabinet has already cleared it. The campaign line was zero. The 1 percent is the version a cash register can do, with about ¥600 billion a year in subsidies so the lower rungs can be told it is close enough. The hole is still ¥10 trillion over two years. She has said it will not be deficit bonds. The ideas floating around will get a hard look. Tamaki is already sharpening his claws, and Hayashi will be on the road with a microphone.
She has written “responsible fiscal expansion” into the 2027 budget request. The ministries have taken that as an invitation. Requests are running past even the pandemic years, aimed at AI, semiconductors, economic security, and defense. If a request touches the industries named in the basic policy, she has told them there is no ceiling so long as there is a return. Defense talk that used to stop at 1 percent, then at 2 percent over five years, is now in the 3.5 percent range. It is a different country than it was five years ago.
Okinawa, One Week On
Genta Koja took the prefecture with about 59 percent on 61.5 percent turnout, the first LDP-backed governor in twelve years and the first born after reversion. He called on the prime minister this week. Futenma has had a city grow up around it. The landfill at Henoko is built. The alignment is not. Tokyo’s line is that money and projects follow a governor who will work with the center. Whether that calendar actually moves is still the question.
The opposition that was supposed to make October hard is still in pieces. Some of the people who left their parties for the Centrist Reform Alliance will drift home. Some will sit as independents. Tamaki has told them to take a powder. The LDP is in the mid-20s in party support. That tail is not going to wag this dog.
The Yen After Twenty-Five Basis Points
A week ago Friday one dollar bought about 153.5 yen. This week the rate traveled a band from the low 153s through a print near 158 and closed Friday around 156.9. The Bank of Japan did what the market had written down, 25 basis points to 1.25 percent, the highest in 31 years, on a 7–2 vote. Governor Kazuo Ueda then gave a mixed account of what comes next. The yen sold off. There are only two Tokyo trading days this week, Thursday and Friday, after the holidays.
Treasury Secretary Scott Bessent has been saying out loud that he is driving the bus. Ueda is independent of the prime minister on paper, and Japan is independent of the United States on paper. In a room with Bessent those sentences get thinner. What PM Takaichi says in Washington these next three days, and how she reports it when she gets back, is part of that story.
New York, Then Xi
The meeting on Tuesday is the one she wanted. Defense outlays and how to pay for them. Host-nation support. The $500 billion Japan said it would put into the United States. The yen and the macro mix. Tokyo’s irritation at U.S. sanctions that reach an ICC official who is a Japanese national. And what she wants Trump to hear before Xi lands.
She is not going to withdraw the comment that a fight over Taiwan would be an existential threat to Japan. Beijing has said that sentence has to come out. Two parliamentary missions have gone over to open a door and come home with the same slap-down. The temperature has not changed. The worry in Nagatachō is getting sidelined the way Japan was sidelined in March, while Trump and Xi have three days, a greeting at Andrews, a troop review, a closed-door bilateral, a wives’ program, a state dinner in the East Room, and a guest list that runs Bezos, Musk, Dell, Altman, and Cook.
China ran quiet last week except for a Chinese cutter ramming a Philippine supply ship in that country’s exclusive economic zone, on the same date Beijing marked the 95th anniversary of the September 18, 1931 incident that opened the Manchurian campaign.
Three Sailors
On Thursday a North Korean freighter was towing a smaller boat that capsized about 100 kilometers off the Oki Islands. Four men went in. The Japan Coast Guard got there first and pulled three out. One had to be revived. The fourth was not found. Pyongyang has no embassy in Tokyo. The old one sat over by Ichigaya. The mother ship has already left the scene. Repatriation, when this has happened before, usually runs through China. There is also a North Korean team at the Asian Games. Either channel is an opening, if someone wants to use it. A Trump–Kim meeting is still in discussion and still timed, in his head, before the American midterms.
Historical Frame
Friday was 95 years from the September 18, 1931 explosion on the South Manchuria Railway that the Kwantung Army used to move. China marked it with sirens. The cutter and the Philippine ship made the same date do more work than a commemoration usually does.
Tuesday is Shigeru Yoshida’s birthday. He was a career diplomat, ambassador in Rome and in London, and not a party man. The military police locked him up for 40 days in 1945 for talking about peace too soon. That internment took him out of the wartime government and made him palatable to the occupation. In October 1945 he was foreign minister. In May 1946 he became prime minister because Ichirō Hatoyama was purged on the eve of taking office and asked him to stand in. He had never won a popular election. In September 1946, on the same calendar the present prime minister is sitting on, he went to the UN General Assembly. He bought a Rolls-Royce in 1934, the year the Diet building was finished, and drove it to work. Taro Aso’s hats and cigars come down that road.
Q&A Highlights
- Does PM Takaichi get the meeting with Trump on Tuesday, and does it give her anything useful before Xi lands on Thursday?
- After Koja, how fast can Futenma-to-Henoko actually move, and what does Tokyo owe Okinawa for it?
- How does Japan send three North Korean sailors home with no embassy and a relationship that is broken?
- Does the yen hold the mid-156s after a 25-basis-point hike the market had already priced, or walk back toward 160?
In Closing
The week runs New York, then Xi in Washington, then two working days after Silver Week. October’s Diet will ask whether a cut that leaves a ¥10 trillion hole can pass a chamber the coalition does not control, and whether a cabinet built for continuity can sell more spending on the revenue already on the books. Ishin is inside now, with a special-mission chair and a spread of vice ministers. Hayashi is on the road. The Upper House is still the problem.
Okinawa flipped last Sunday and the new governor has already been to the Kantei. The Bank of Japan did the quarter-point the market expected and the yen sold off anyway. Whether 156 holds through a short trading week is the market question. Whether PM Takaichi comes home from Tuesday with something she can use before Xi sits down with Trump is the political one. The typhoon is supposed to vacuum the air out by Tuesday.
Thank you to everyone who joined and sent questions. We will be back next Sunday morning, September 27, 2026, at 8:20 a.m. JST.
— Timothy Langley
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