Japanese Politics Updates – December 7, 2025

Good morning, and welcome to the recap of Japanese Politics One-on-One, Episode 252, broadcast Sunday morning from below decks on Gryms, my 51-year-old Swan resting quietly while Tokyo’s political machine ran at full throttle.

Two weeks ago Prime Minister Sanae Takaichi was in South Africa for the G20 and Japan had a shortened holiday week. Last week was a very different story. This was her first uninterrupted, full Diet week since assuming office, and it was relentless. She arrived back in Tokyo to push the largest stimulus package in years through the Lower House, restore a working majority, manage escalating tensions with China, and navigate yet another spate of political funding scandals and cyberattacks, all while the yen remained stubbornly weak and day-to-day costs kept squeezing households.

Money on the Table

The defining policy action of the week was the passage in the Lower House of a stimulus package totaling ¥21.3 trillion, underwritten by a supplementary budget estimated at roughly ¥17.7 trillion. The scale is immense. Outside of pandemic spending, Japan does not typically deploy sums like this, and this package alone exceeds the country’s entire annual defense budget.

The immediate aim is reputably simple: ease the pain of inflation. Energy subsidies, household relief, price containment efforts, and business support now give Takaichi something tangible to back her claim that she is addressing cost-of-living fears directly. But there is a second track running beneath the daily economics. This stimulus is also a down payment on a longer-term growth strategy tied to emerging sectors such as artificial intelligence, semiconductor manufacturing, shipbuilding, defense industries, and green transformation.

To give form to this ambition, the Prime Minister announced the establishment of a Japan Growth Strategy Headquarters and authorized formal discussions with Ishin on tax reform looking ahead to 2026. The subtext is clear. The short-term story is survival. The long-term story is reinvention.

Whether the two stories harmonize or contradict each other will determine how markets, voters, and coalition partners judge this administration. Spending at this scale collides directly with claims of fiscal discipline. For now, Takaichi is betting that momentum counts more than spreadsheets.

The Numbers That Suddenly Matter

That bet would have been far harder to make without another change that quietly reshaped the parliamentary landscape this week: the restoration of a Lower House majority.

Three former Nippon Ishin no Kai lawmakers formally joined the Liberal Democratic Party, giving the ruling bloc its first outright working majority of the new administration. It is narrow, but it is real. Ishiba never had this luxury. Takaichi now does.

Two of the new LDP members entered parliament via proportional representation. One comes from a single-seat district in Osaka. All three were expelled from Ishin months ago for internal dissent and signs of willingness to cooperate with the LDP. Their defection immediately stabilized the government’s legislative footing and reduced the danger of procedural paralysis.

It has also intensified internal strain. Ishin must now confront the reality that men it expelled for disloyalty have helped secure the Prime Minister’s future. And the irony is hard to miss: one of the government’s policy goals is to shrink the size of the Lower House by about ten percent. The quickest method is to cut proportional representation seats. Two of the three new LDP members now depend on exactly that system for their political survival.

Behind the scenes, negotiations over committee assignments and party privileges have already begun. Majorities are mathematical in theory and transactional in reality.

The Yen and the Cost of Living

If the Diet was consumed with stimulus and seat arithmetic, the public was still watching one number: the yen.

It closed Friday near 155 to the dollar. That level no longer shocks in headlines, but it has very real consequences in grocery stores, at gas stations, and on utility bills. Daily costs are not merely rising; they are accelerating unevenly, and voters are keenly aware that exporters profit more cleanly from currency weakness than households suffer from it.

The government moved quickly to signal awareness and intent. Senior officials convened across ministries, coordinating currency messaging and contingency planning with the Bank of Japan. In parallel, the administration announced the creation of a new enforcement body modeled loosely on the United States’ “Doge” cost-oversight framework. Its purpose is not subtle: identify corporate pricing behavior, expose margin inflation, and show the public that blame is not being assigned only to global markets.

It is policy theater with substance behind it. Whether companies respond with compliance or cosmetic promises remains to be seen.

China, Taiwan, and the Okinawa Nerve

Beijing’s response to Takaichi’s Taiwan remarks did not soften this week. On the contrary, economic retaliation continued through seafood restrictions, flight quotas, and the quiet suspension of cultural traffic. More unsettling was the return of rhetoric questioning Japan’s historical claim to Okinawa.

This is not academic history. It is strategic messaging. By invoking Okinawa, China signals that pressure will be applied not merely to policy but to legitimacy itself.

Tokyo, for its part, continues to draw its lines physically rather than rhetorically. Missile positions on Yonaguni and Ishigaki remain in place. Defense Minister Shinjiro Koizumi’s island visits remain visible. Joint exercises across the region continue without fanfare. The gap between diplomatic language and military posture widens.

Observers abroad speak of militarization. Inside Japan, many speak instead of inevitability. The United States’ evolving role and China’s increasingly explicit leverage have forced conversations that Japan avoided for decades.

Foreign Residents and Political Temperature

The immigration debate is no longer quiet. Members of the government are openly discussing a goal of zero illegal residents, increasing permanent residency fees, and tightening compliance standards. What once lived deep in bureau memos now sits in political speeches.

This is not accidental. Parties that ran sharply nationalist campaigns in the Upper House election were rewarded with attention and, in some districts, traction. The mainstream is now echoing parts of that rhetoric while attempting not to inherit its excesses.

Yet the demographic contradiction remains unresolved. Japan needs workers, caregivers, taxpayers. Political appetite for foreigners, however, is cooling faster than employment numbers can rise.

Scandals and System Stress

No Japanese political week is complete without scandal, and these arrived fully-stocked.

Allegations touching Internal Affairs and Communications Minister Yoshimasa Hayashi, Economic Security Minister Minoru Kiuchi, Ishin co-leader Fumitake Fujita, and emerging questions surrounding Defense Minister Shinjiro Koizumi converged into a familiar conclusion: the odds of a New Year reshuffle now appear overwhelming.

For Takaichi, this creates both danger and leverage. The danger lies in the suggestion that nothing has changed. The leverage lies in the opportunity to prove that it has.

Cyber also entered the picture forcefully. Ransomware attacks disrupted Askul’s logistics operation, rippling into household supply chains. Asahi Beer Group disclosed intrusion and data exposure. Japan’s vulnerability in digital defense is no longer an abstract risk. It is economic exposure. Security is now personal.

Questions from the Audience

Viewers pressed the government’s stability, China’s strategic intent, Okinawa’s vulnerability, stimulus winners and losers, foreign policy credibility, party-switching ethics, the risk of militarization, and the durability of the yen.They also asked whether this administration is simply spending or shaping.

Final Thoughts

The Prime Minister now controls the chamber, the budget, and the tempo. What she does next will determine whether this government defines recovery or merely funds it.

Thank you for joining us. We will be back on Sunday, December 12, at 8:20 a.m. Until then, stay watchful: we anticipate an excuse building.