Japanese Politics Updates – December 14, 2025

Good morning, and welcome to the recap of Japanese Politics One-on-One, Episode 253, broadcast on a bitterly cold & wet December Sunday, with me pinned in port aboard the Good Ship Gryms in Hota as wind and weather reminded us who is in charge.

This week’s objective is to focus on what actually moved Japan’s political, economic, and security trajectory as we enter the final three days of the Extraordinary Diet session and begin setting the conditions for a highly consequential January and early 2026.

This Week’s Headline Takeaways

• The Supplementary Budget is passing but how it passes matters more than the number. DPFP support (Tamaki) has become essential insurance in the Upper House.
• The LDP–Ishin relationship is being de-risked as the Prime Minister is quietly building redundancy.
• Komeito is behaving like an opposition party that still wants governing credibility, so their collaboration in the passage of the supplemental budget (plus hopefully more). Their “vote” is brand management, not loyalty.
• Electoral reform (seat cuts) is effectively dead for this session, and Ishin will leave angry, but not angry-enough to leave the dance.
• The yen remains historically weak (around ¥/$155.75), and the BOJ meeting this week is expected to deliver a meaningful policy signal.
• China/Russia operational activity around Japan is no longer theater. It’s normalization of pressure. Tokyo is bracing for “new normal” (…but not the one being pursued by China).
• Washington and the U.S. Embassy are singing slightly different notes on China, and Japan is trying not to become collateral damage in a larger U.S.–China trade calculation. This could happen, though.

The Prime Minister’s Week and the Final Days of the Diet

Prime Minister Takaichi is now six weeks into office, and the tone of this week was not ceremonial. No state visits, no headline diplomacy, just hard parliamentary work: Budget Committee defenses, coalition maintenance, and careful language designed to reassure markets while still pushing a very large fiscal package.

Her original pitch was fiscal responsibility. The problem is that long-term yields are at multi-decade highs. The yen remains under pressure, so “responsible stimulus” has become a balancing act rather than a slogan. If you listen closely, her phrasing has grown more calibrated — not because she is changing her mind, but because she now understands that market confidence has become a political variable.

At the same time, one of the session’s flagship political promises — the “self-sacrificing” electoral reform narrative — is slipping away. The proposed reduction in Lower House seats, once framed as a headline reform, is now effectively stalled and likely dead for this session.

The result: the government will exit this Extraordinary Diet session with essentially only one major achievement and one major unfulfilled promise and the aftertaste this creates will shape January.

Supplementary Budget 2025: The Achievement and the Signal

The Supplementary Budget of roughly ¥18 trillion will pass. That will allow the government to claim legislative competence early in Takaichi’s tenure.

But the real story is the coalition arithmetic.

The governing bloc remains short of a working majority in the Upper House by a small number of votes. That is where DPFP (Tamaki) has re-emerged as a crucial, practical actor, and why the Cabinet’s warmth toward him this week is not incidental. It reads like the Prime Minister quietly saying: Ishin is my formal partner, but I will not let my government’s stability depend on a single unpredictable dance partner.

That means Ishin is being de-risked. And that, politically, is one of the more skillful things we have seen from an LDP leader in a long time: build redundancy without declaring a divorce. Former PM Ishiba was unable to do this.

LDP–Ishin: Strained, Intact and Re-Sorted

The Ishin problem is emotional and structural at the same time.

Ishin views seat cuts as proof of “reform seriousness.” The LDP views seat cuts as politically costly  because a 10% reduction doesn’t come out of the air. Rather, it comes out of somebody’s career. The Prime Minister is caught between Ishin’s demand for a visible deliverable and the LDP’s internal resistance (including backbenchers who dislike the coalition in the first place).

With only days left, Ishin now appears to recognize that Takaichi will not extend the Diet. She will not gamble political capital on a measure that alienates her own party, either. Ishin will be angry, they will posture, maybe even threaten. But Ishin also understands the basic strategic reality: being “in” is better than being “out,” especially with January bringing a 150-day Regular Diet session and potentially volatile legislative terrain.

So the likely outcome is a familiar Japanese one: the fight is postponed, not resolved. The bill dies with the session. The argument restarts in January and Ishin will demand “compensation” in some form, even if it is not a ministerial position.

Komeito: Opposition Identity Without Losing Relevance

Komeito’s behavior around the budget deserves attention because it illustrates the new logic of political party branding in Japan.

Komeito is trying to convince voters it did not abandon household interests, even as it exits governing power. Voting behavior becomes less about allegiance and more about continuity: “We can still deliver tangible benefits, see?”

That is why the budget vote is not a return to friendship. It is brand management: positioning for the next election while keeping leverage for future coordination.

Economy: Yen, BOJ, and a Quiet Shift in the Inflation Story

The yen closed Friday at approximately ¥155.75/$ — a touch stronger than last week, but still deeply weak by historical standards. This is not random volatility. It reflects converging forces: higher Japanese yields, persistent inflation expectations, and anticipation that the BOJ is edging toward its next move.

The Bank of Japan meets Thursday and Friday, with real speculation about another rate increase. Even if the BOJ does not move, the messaging will matter. The market is trying to determine whether Japan is finally transitioning from cost-push inflation into something closer to demand-pull inflation as early Shunto signals begin to surface.

Meanwhile, the weak yen continues to bite in an uneven way. People feel it not only at the grocery store and the petrol station. It is in the quiet monthly drip of imported services: software licenses, subscriptions, and anything priced in dollars. Exporters benefit, but even they know currency-driven gains can evaporate quickly if policy shifts accelerate.

The Prime Minister’s fiscal brand is now pinned to a single question: can she keep stimulus moving without triggering market distrust?

Regional Security: A New Normal of Pressure

Japan’s security environment feels more active — and more uncomfortable — by the week.

The Ministry of Defense confirmed increased Chinese and Russian joint activities, including coordinated bomber and fighter operations around Japan’s periphery. This is serious. These are not symbolic flybys. They are operational demonstrations designed to normalize pressure and probe response patterns.

Japan is increasingly bracing for a “routine incident” environment where the exceptional becomes normal.

At the same time, discussions are advancing within the LDP (and with Ishin) on loosening restrictions on arms exports. At these discussions, the tone has shifted from theory to implementation. Tokyo is also dealing with multidirectional pressure: the north, the south, and the east, all at once. Layer in a run of earthquakes and you get a public atmosphere of vigilance.

U.S.–China–Japan: Two Tones, One Delicate Game

One of the more subtle but important dynamics this week: the contrast between the tone coming from the U.S. Embassy in Tokyo and the cooler signals coming out of Washington, particularly as the U.S. explores trade stabilization with Beijing.

The logic may be consistent — Embassy reassurance versus Washington’s larger China management — but the effect in Tokyo is still unsettling. Japan is trying to uphold alliance credibility without becoming collateral damage in a larger trade and strategic calculation.

Prime Minister Takaichi’s more careful phrasing reflects this balancing act. She has also asked for a meeting with President Trump. If it happens quickly, it will be to remove ambiguity.

Q&A

• What is your take on the relationship between religion and politics in Japan going forward, specifically Tenri, the Unification Church, and Komeito now outside the administration?
• Do you expect new legislation or tighter rules regulating the relationship between political parties and religious organizations?
• Does “benkyōkai” money go to the individual politician, or is it shared with / routed through the party?
• What about Okada — does he (and his family’s China exposure) represent a “wolf warrior” presence inside the Diet?
• Earlier you said Ishin is unlikely to leave the coalition even if the LDP fails to deliver electoral reform. Why is that?
• Does the Cabinet’s unusually enthusiastic response to DPFP support for the supplementary budget signal that the government is already positioning DPFP as an alliance back-up in case Ishin withdraws support?
• Is Komeito having second thoughts about exiting power, as suggested by its behavior on the supplementary budget vote?
• In the effort to build a trade deal with the PRC, is the U.S. sending confusing signals to Japan — with the U.S. Ambassador in Tokyo being effusive while Washington’s tone is noticeably more tepid?
• What is the current state of the U.S.–Japan security alliance and related strategic coordination, including any recent “deal” dynamics?
• Do you still believe a snap election is plausible as early as the opening of the January Diet session? What signals should we watch (especially the announced opening date)?

Final Thoughts

This week was less about drama and more about structure. The Supplementary Budget will pass but the passage reveals who matters in the Upper House and how the Prime Minister is quietly building redundancy. Electoral reform will fail. However, the failure reveals where the coalition’s true limits are. While the yen and BOJ meeting will dominate market attention, the deeper story is the slow shift in Japan’s inflation psychology and the politics of fiscal credibility.

And on security, the region is telling Japan, plainly, that the old assumption of “incidents as exceptions” is over.

We’re heading into January with momentum and undoubtedly with surprises. The next brieifing goes on air on December 21, Sunday at 8:20 am Japan time. Tune in to stay informed.