Japan makes history as Takaichi prepares to become country’s first female prime minister

Sanae Takaichi made history on Tuesday by winning Japan’s parliamentary vote to become the country’s first female prime minister.

Takaichi received 237 votes in the first round of voting, making a second round in the Lower House, which has 465 seats, unnecessary, according to public broadcaster NHK.

His victory comes after the ruling Liberal Democratic Party joined forces with the Japan Innovation Party and reportedly signed a deal over the weekend to form a coalition government.

Takaichi agreed to support JIP policies such as reducing the number of parliamentary seats, free secondary education and a two-year break on the food consumption tax, according to Reuters.

Tobias Harris, founder and director of risk consultancy Japan Foresight, told CNBC’s “Squawk Box Asia” that the JIP might not want to take a ministerial position, saying “there is a real risk of joining a coalition with a LDP that still has historically low approval ratings, (and) doesn’t really have public trust.”

Japanese national media also reported that the PIJ is not interested in ministerial positions in the new administration and will instead support the government from outside.

If the PIJ doesn’t like the LDP’s approach, it will be easier for it to leave the coalition, Harris said.

In the Ishiba administration, the LDP suffered heavy electoral losses, losing its majority in both the upper and lower houses.

from Japan Nikkei 225which had risen 1.5% at the start of the day, erased its gains, while the benchmark index 10-year government bond yields fell 1.6 basis points to 1.654%. The yen weakened 0.33% to 151.25.

Takaichi’s journey to the country’s top job was difficult.

In the 2024 LDP presidential race, Takaichi lost to Shigeru Ishiba. She won the party leadership in September this year, defeating Agriculture Minister Shinjiro Koizumi after Ishiba announced his resignation.

But on October 10, the Komeito party abruptly ended its alliance with the LDP, ending a relationship dating back to 1999, putting Takaichi’s fate in limbo.

A die-hard conservative, Takaichi has been widely described as an apostle of “Abenomics,” the economic strategy of the late Prime Minister Shinzo Abe, which advocated accommodative monetary policy, fiscal spending and structural reforms.

She had previously criticized the Bank of Japan’s plan to raise interest rates during the LDP leadership race in 2024, although BoJ Governor Kazuo Ueda said the central bank would set rates “without any preconceived ideas.”

Geopolitically, Takaichi has called for a hard line on China and also favors revising Japan’s pacifist constitution.

His previous visits to the controversial Yasukuni Shrine, which honors Japan’s war dead including convicted war criminals, have drawn criticism from China and South Korea, who view the site as a symbol of Tokyo’s wartime aggression.

Takaichi is going to be ‘very, very careful’ in how she communicates her opinions, particularly on foreign policy,” Kei Okamura, managing director and portfolio manager at Neuberger Berman, told CNBC earlier this month.

“Her views on China and Korea have also been very well presented. But she also understands that she has to have very good relations with all of these countries, especially the United States, simply because they all have a very big impact in terms of being the main destinations for Japan’s exports.”