Japanese Politics Updates – December 8, 2024

Welcome to the 200th episode of Japanese Politics One-on-One! Thank you for your interest and support along the way. We continue to deliver the latest in Japanese politics with gratitude and appreciation.

• Yen closes at 149.97¥/$
• President Yoon declared martial law, before rescinding 6 hours later. Not good for Japan-S. Korea relations;
• Ishin-no-kai votes-in new leader, Osaka Governor Yoshimura Hirofumi; 
• Yuichiro Tamaki, suspended as party leader for 3 months, following revelation of his extra-marital affair. Will he be back on March 3rd? Diet Affairs Chief Motohisa Furukawa will step in;
• Visa requirements for Japanese visitors to China have been lifted, China has also reciprocated; 30-day visa-free visits to China for Japanese visitors… a four-year ban ends;
• Governor Koike commits to a 4-day work week for Metropolitan Government workers, in effect April 15th;
• Warmest autumn in Japan since records began in 1898: 1.9 degrees warmer than usual. Pushing the start of autumn-leaves-turning a whole month!

Major Issues in this Extraordinary Diet Session

Supplementary Budget

The ¥13.9 trillion supplementary budget is a centerpiece this session, to provide immediate economic stimulus before April, with a focus on key sectors. Debates will occur this week in both Houses, with voting expected December 18.

Raising the Tax-Free Income Floor

The Democratic Party for the People (DPFP) has made increasing the tax-free salary threshold from ¥1.03 million to ¥1.78 million their priority. This change addresses concerns about growing tax burdens exceeding wage increases. The DPFP is using its support for other bills as leverage, holding negotiations on this issue as a condition for cooperation. This is called ‘horse-trading’.

Political Reform Bills

Several politically sensitive bills are also on the table:

• Political Funds Control Law Amendment: Seeks to ban corporate contributions, a lifeline for the LDP. This issue is contentious, as the LDP and Komeito heavily rely on such funds for electoral dominance.
• Repeal of the Party Subsidy Law: This 15-year-old law provides government subsidies to political parties, which smaller parties view as perpetuating LDP dominance.

Minority Government Challenges

As a minority government, the LDP / Komeito coalition faces mounting opposition pressure. If opposition parties unite, they could defeat the government on key votes, though internal divisions complicate such coordination. Meanwhile, the Constitutional Democratic Party (CDP) controls the Budget Committee chairmanship, an influential position not held by the opposition for the last 20 years, further limiting the LDP’s maneuvering.

Timeline and Outlook

With only 13 days remaining in the session, time constraints loom large. While the supplementary budget appears on track for passage, three other bills face hurdles. The Political Funds Control Law revision proposal, in particular, is likely to spill into 2024, as its content directly challenges the LDP’s financial foundations. The possibility of extending the Diet session is being considered but is constrained by the approaching year-end calendar.

The session reflects a dramatically shifting political landscape. Unlike previous administrations under Abe or Kishida, which wielded decisive majorities, the current minority government must adopt a conciliatory tone. The opposition, sensing opportunity, is leveraging its position to force concessions, particularly on the tax-free income floor.

Key Observations:

• The supplementary budget’s swift passage is critical, both politically and economically;
• Political reform debates are poised to intensify as they challenge entrenched party financing norms;
• Extending the session might buy time for debate, but achieving consensus on all bills within the current session seems increasingly unlikely.

The session’s outcome will set the tone for 2024, with unresolved tensions likely spilling into the next legislative calendar. The stakes are high, and the government’s ability to navigate these challenges will be a key test of its leader’s political skills.

Military and Other Updates

Japan Extends Military Aid to the Philippines

Japan has committed ¥1.6 billion (approximately $10.7 million USD) in military aid to the Philippines under its Overseas Security Assistance Framework, part of its 2022 National Security Strategy. This initiative, first developed under former PM Abe and solidified by PM Kishida, represents Japan’s effort to support regional allies amid growing tensions with China.

The aid focuses on coastal surveillance equipment, radar systems, and rigid inflatable boats for the Philippine Air Force. While the framework initially had a ¥2 billion budget, the government now plans to expand it to ¥5 billion. Similar assistance is being considered for Indonesia, Mongolia, and Djibouti… each its own surprise.

This program aligns with Japan’s broader strategy to bolster defensive equipment exports. Considering the constraints of Article 9 of its Constitution, which prohibits offensive military actions, these developments are seen as a stepping stone toward broader security collaborations and building into the economy a defense industry.

US Space Force Presence in Japan

The US Space Force established its first office in Japan at Yokota Airbase last week. Staffed with 15–20 personnel, the office focuses on interoperability and enhanced coordination with Japan. This development coincided with US Defense Secretary Lloyd Austin’s visit, highlighting efforts to strengthen regional defense ties.

JSDF’s Growing Role

Amphibious Team Expansion: In another of a long string of firsts, Japan’s Self-Defense Forces (JSDF) amphibious unit, tutored by US Marines these last couple of years, will soon participate in joint drills in Australia (with US & Australian  forces), a significant step in enhancing regional interoperability and readiness. These moves are part of a larger strategy to deter potential Chinese aggression, particularly regarding Taiwan. The emphasis is on making any Chinese military action a prohibitively costly decision.

Taiwanese President’s US Visit

The Taiwanese President visited Hawaii last week as part of a broader Pacific tour, drawing sharp criticism from China. Beijing condemned the US for hosting and acknowledging Taiwan’s leader, signaling heightened tensions over Taiwan’s international engagements.

DMM Crypto Exchange Bankruptcy

Tokyo-based crypto exchange operator DMM declared bankruptcy following the theft of ¥4.8 billion in Bitcoin earlier this year (April). The funds, stolen in an inside job, forced DMM to repay affected users, depleting their reserves. Remaining assets will be sold to VC Trade, with the sale concluding in March.

This incident underscores persistent vulnerabilities in the cryptocurrency sector, even among established operators.

Questions from the Audience Addressed Exclusively During the Briefing

• Ishin-no-kai national leader Yoshimura stated that he would work towards an opposition seat arrangement to avoid vote splitting in the UH election. Might the opposition move to defeat the government in a no confidence motion after the passage of the national budget in March 2025, ensuring a double LH/UH election?
• According to some surveys companies that have introduced the 4 day work week, these companies see higher revenue compared to those with a 5 day week. It is said that this is because expenses are reduced. What are your thoughts?
• Why is Hyogo governor Motohiko Saito still under scrutiny for alleged bribery related to using social media in his election campaign? How does this differ from spending PR funds on traditional methods like posters and campaign vehicles?
• What can Japan do to retain foreign students and workers?