Japan stands on the cusp of a political transition that could redefine its domestic trajectory and international standing. With Prime Minister Shigeru Ishiba stepping down after historic electoral defeats, the Liberal Democratic Party (LDP) faces its most consequential leadership election in decades. The outcome on October 4 will not only determine the next Prime Minister, but also signal whether the LDP can reinvent itself after years of scandal, electoral setbacks, and eroding public trust.
In early September, Ishiba declared his resignation after the LDP’s majority was shattered in both chambers. This was a first since the founding of the party in the 1950s, prompting factions within the party to demand accountability. Ishiba delayed his resignation until after securing a critical trade agreement with the United States, which saw thorny tariffs lowered in exchange for a $550 billion investment from Japan. He reasoned that this negotiation required stable leadership.
Ishiba’s exit reflects not only personal accountability but a deeper crisis of confidence in the LDP’s ability to govern.
A Broader Vote, Higher Stakes
The election will determine the next party president and, by extension, the next Prime Minister. This year, the LDP has chosen to hold a full-spec election, giving equal weight to rank-and-file members and Diet lawmakers. There are 590 votes in total. With 295 votes each to LDP members of both houses and party members nationwide, more than a million members will directly influence the first round. This procedural choice is a recognition that the party must reconnect with its grassroots to regain legitimacy.
Yet the system also preserves the old guard’s influence: if no candidate secures a majority in the first round, the contest goes to a runoff where only parliamentarians and prefectural representatives vote. Charisma may bring momentum in the first stage, but networks and backroom alignments are decisive in the second.
The Contenders and Their Visions
Multiple candidates have officially thrown their hats in the ring. Former Foreign Minister Toshimitsu Motegi became the first official candidate to enter the race. He emphasised the urgency of party unity, stating, “Our party is in the biggest crisis since its establishment,” and asserted his confidence in securing the required nominations to run.
While Motegi has launched his bid, other prominent figures, most notably Sanae Takaichi, Shinjirō Koizumi, and Yoshimasa Hayashi are leading the race, each representing different ideological currents within the LDP.
Will Japan Get its First Female PM?
Sanae Takaichi carries the conservative banner. If elected, she would be Japan’s first female prime minister. Her fiscal expansionism appeals to social policy advocates but rattles financial markets. She is also more hawkish on China and might lean towards a tighter U.S. alignment.
Shinjiro Koizumi is youthful and media-savvy. His emphasis on wage growth resonates widely, but his lack of factional support could undermine him in a runoff. Compared to Takaichi, he is likely to be more cooperative with democratic partners and softer on nationalist rhetoric.
Yoshimasa Hayashi, the Chief Cabinet Secretary, is the establishment’s cautious voice. He stresses fiscal prudence and policy continuity, reassuring investors but struggling with public charisma. Finally, in the race is Takayuki Kobayashi, the former Economic Security Minister, who is seen as a security hawk, with a focus on techno-strategic hardening and strengthening the defence posture vis-à-vis China.
Recent polls show a tight race between Koizumi and Takaichi. Sanae Takaichi leads with 34.4% support, and Shinjirō Koizumi is second at 29.3%. Takaichi is polling strongly among LDP supporters and the general public. However, her lead is not overwhelming; in many polls, she hovers only slightly ahead of Koizumi, leaving room for shifts. This suggests an increasing possibility of a run-off.
A Test for Renewal
At the heart of this election is Japan’s fiscal direction. Markets have already signalled unease, with the yen sliding and the Bank of Japan pausing planned rate hikes. Investors also expect a further sell-off in Japan’s long-term government bonds. Yet this contest is not only about economics. With Japan’s ruling party weakened in both chambers of parliament, the new leader will need to master coalition-building and reassure disillusioned voters.
After the LDP elects its new leader, the candidate must be confirmed as Prime Minister through a vote in the National Diet. With the LDP-Komeito coalition having lost its legislative majority, the incoming PM may face challenges in securing stable governance, potentially requiring bipartisan or cross-party strategies to pass legislation.
Regardless of who wins, the fragility of the LDP’s parliamentary standing means Japan could face early elections within months, making October 4 only the beginning of a longer struggle for legitimacy.
(Vanshika Saraf, is a Research Analyst - Indo-Pacific Studies Programme, Takshashila Institution.)
Views are personal, and do not represent the stance of this publication.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
