1
00:00:02,520 --> 00:00:07,040
Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

2
00:00:10,520 --> 00:00:14,000
Speaker 2: Welcome to the Daybreak Asia Podcast. I'm Dan Schwartzman. Doug

3
00:00:14,040 --> 00:00:17,200
Speaker 2: Chrisner's off. This week, we begin in Japan, where sanay

4
00:00:17,200 --> 00:00:20,680
Speaker 2: At Takaichi has become the country's first female prime minister.

5
00:00:21,120 --> 00:00:25,120
Speaker 2: Takaichi vowed to strengthen the nation's economy and defense capabilities

6
00:00:25,400 --> 00:00:30,000
Speaker 2: and enhance relations with the US. However, Takaichi faces several challenges.

7
00:00:30,240 --> 00:00:33,320
Speaker 2: Those include discontent over the cost of living, dealing with

8
00:00:33,360 --> 00:00:36,479
Speaker 2: the looming visit by US President Donald Trump, and reviving

9
00:00:36,520 --> 00:00:39,360
Speaker 2: the fortunes of a ruling party that has lost its dominance.

10
00:00:39,680 --> 00:00:42,920
Speaker 2: From more, we hear from Nintao Nishimura, senior associate in

11
00:00:42,960 --> 00:00:46,040
Speaker 2: the Asia Group's Japan practice. He spoke to Bloomberg Xaviril

12
00:00:46,080 --> 00:00:48,639
Speaker 2: hon Ganna Bell Jewelers on the Asia Trade.

13
00:00:48,840 --> 00:00:53,680
Speaker 3: So, first off, we are seeing her appointing party rivals

14
00:00:54,240 --> 00:00:57,440
Speaker 3: in order to secure her leadership in some ways, What

15
00:00:57,480 --> 00:00:59,959
Speaker 3: do you make off her strategy so far?

16
00:01:01,880 --> 00:01:04,039
Speaker 4: First of all, thank you for having me. I think

17
00:01:04,160 --> 00:01:07,520
Speaker 4: this is a sign of the reality in the Liberal

18
00:01:07,600 --> 00:01:11,800
Speaker 4: Democratic Party where any new leader, as we've seen also

19
00:01:11,840 --> 00:01:16,640
Speaker 4: with Shigiri Shiva, has to sort of balance out the

20
00:01:16,680 --> 00:01:21,000
Speaker 4: power dynamics within the party, and for Takaichi, who won

21
00:01:21,080 --> 00:01:25,880
Speaker 4: this election not in an outright majority but in a contest,

22
00:01:26,520 --> 00:01:30,280
Speaker 4: has to try and keep unity within the party by

23
00:01:30,280 --> 00:01:33,800
Speaker 4: bringing in her rivals. She named two of her rivals

24
00:01:33,800 --> 00:01:37,360
Speaker 4: in the or three of the rivals in the cabinet

25
00:01:37,440 --> 00:01:41,560
Speaker 4: and also had her other arrival on Takai Ki Kobashi,

26
00:01:41,680 --> 00:01:45,120
Speaker 4: in her party leadership lineup. So clearly this is a

27
00:01:45,160 --> 00:01:49,360
Speaker 4: sign that she is not on solid foundations and has

28
00:01:49,400 --> 00:01:53,120
Speaker 4: to balance out relations with different parts of the party.

29
00:01:54,760 --> 00:01:58,760
Speaker 3: So there could be a lot of negotiation, maybe horse trading.

30
00:01:59,120 --> 00:02:01,920
Speaker 3: What is that going to mean for policy making under

31
00:02:01,920 --> 00:02:06,640
Speaker 3: her administration and does that affect the expectation that we

32
00:02:06,760 --> 00:02:09,200
Speaker 3: will see expansionary fiscal policies.

33
00:02:11,520 --> 00:02:14,519
Speaker 4: I think to an extent it's it might be unavoidable

34
00:02:14,720 --> 00:02:19,040
Speaker 4: at the beginning at least to see certain stimulus happening.

35
00:02:19,080 --> 00:02:23,840
Speaker 4: Because of the need for inflation relief measures, the diet

36
00:02:23,919 --> 00:02:27,959
Speaker 4: will discuss and deliberate on FISCO year twenty twenty five

37
00:02:28,040 --> 00:02:32,840
Speaker 4: supplemental budget in order to finance the inflation relief measures,

38
00:02:32,880 --> 00:02:36,560
Speaker 4: and because the LDP and the Japan Innovation Party do

39
00:02:36,639 --> 00:02:39,560
Speaker 4: not have an outright majority in both houses, they would

40
00:02:39,600 --> 00:02:42,080
Speaker 4: need to work with the opposition parties, and naturally that

41
00:02:42,120 --> 00:02:45,519
Speaker 4: would require a lot of compromise and probably more spending

42
00:02:46,240 --> 00:02:49,239
Speaker 4: along the lines of what opposition parties want. And so

43
00:02:49,400 --> 00:02:52,840
Speaker 4: in that sense there will be I think initially a

44
00:02:52,840 --> 00:02:57,639
Speaker 4: boost in spending. But Takaiji has mentioned a keyword which

45
00:02:57,680 --> 00:03:02,840
Speaker 4: is proactive but responsiblescal So despite this notion that she

46
00:03:03,040 --> 00:03:07,040
Speaker 4: is a pro spending lawmaker, she is definitely going to

47
00:03:07,080 --> 00:03:09,760
Speaker 4: have to keep in mind the debt ratio and other

48
00:03:09,840 --> 00:03:14,280
Speaker 4: factors that will to a certain extent constrain her ability

49
00:03:14,320 --> 00:03:16,320
Speaker 4: to spend government budget.

50
00:03:18,120 --> 00:03:21,440
Speaker 5: Yeah, as you said that the partnership that the LDP

51
00:03:21,680 --> 00:03:25,160
Speaker 5: has with Ishin isn't really like the coalition that they

52
00:03:25,200 --> 00:03:28,560
Speaker 5: had with Kamatos So what's that process of trust building

53
00:03:28,600 --> 00:03:30,400
Speaker 5: going to look like and how long do you think

54
00:03:30,400 --> 00:03:32,440
Speaker 5: it will take as well?

55
00:03:32,800 --> 00:03:32,960
Speaker 1: Well?

56
00:03:33,000 --> 00:03:36,680
Speaker 4: I think the first big test will be this extraordinary

57
00:03:36,720 --> 00:03:40,760
Speaker 4: diet session that started this week. Ishin has been quite

58
00:03:40,840 --> 00:03:44,080
Speaker 4: clear that they are not going to jump into a

59
00:03:44,120 --> 00:03:47,600
Speaker 4: straight coalition like Komoto, and this would be more of

60
00:03:47,600 --> 00:03:50,920
Speaker 4: a confidence and supply agreement in which they would vote

61
00:03:51,040 --> 00:03:56,280
Speaker 4: for the LDP or Takaichi in no confidence motions and

62
00:03:56,320 --> 00:04:00,520
Speaker 4: on the budget, but on bills on individual legislation, that's

63
00:04:00,560 --> 00:04:04,440
Speaker 4: a different story. So essentially Takaichi will have to negotiate

64
00:04:04,520 --> 00:04:08,320
Speaker 4: with Ishin and also with other opposition parties to pass legislation,

65
00:04:08,680 --> 00:04:11,040
Speaker 4: and so in that sense, the trust building will take

66
00:04:11,080 --> 00:04:14,200
Speaker 4: some time, and I think at least until next year's

67
00:04:14,200 --> 00:04:17,520
Speaker 4: budget is passed in March. I think Ishin will be

68
00:04:17,839 --> 00:04:20,800
Speaker 4: monitoring to see if the policy agreement that the two

69
00:04:20,839 --> 00:04:24,760
Speaker 4: parties signed on Monday is carried out. And there are

70
00:04:24,760 --> 00:04:28,000
Speaker 4: a couple of non negotiables that Ishin has mentioned, such

71
00:04:28,000 --> 00:04:33,320
Speaker 4: as the second Capital Initiative, reducing social insurance fees and

72
00:04:33,400 --> 00:04:37,320
Speaker 4: also reducing the number of diet members by ten percent,

73
00:04:37,360 --> 00:04:40,080
Speaker 4: which all of these are going to be some challenging

74
00:04:40,120 --> 00:04:43,640
Speaker 4: issues that other opposition parties will not want to go

75
00:04:43,720 --> 00:04:46,359
Speaker 4: forward with. So this is a tough kind of environment

76
00:04:46,440 --> 00:04:48,920
Speaker 4: for Takaitu to be in, but this is where her

77
00:04:49,000 --> 00:04:50,799
Speaker 4: leadership will really be put to the test.

78
00:04:52,400 --> 00:04:55,440
Speaker 5: Yeah, there's only a lot of different areas still we

79
00:04:55,440 --> 00:04:57,280
Speaker 5: be worked out between Ishan and the ALDP.

80
00:04:58,200 --> 00:04:58,839
Speaker 2: Both of these.

81
00:04:58,720 --> 00:05:01,800
Speaker 5: Parties are perceived as big, more right leaning. Does that

82
00:05:01,880 --> 00:05:04,279
Speaker 5: also create a barrier for them or an obstacle to

83
00:05:04,400 --> 00:05:07,159
Speaker 5: deal with other parties in Parliament when they're trying to

84
00:05:07,160 --> 00:05:10,680
Speaker 5: also pass any measures around social security or cost of

85
00:05:10,720 --> 00:05:12,000
Speaker 5: living issues, for instance.

86
00:05:13,640 --> 00:05:16,719
Speaker 4: I think that could play a factor in some parties

87
00:05:16,760 --> 00:05:22,440
Speaker 4: outright just opposing anything the LDP and Ishin does. There's

88
00:05:22,600 --> 00:05:26,360
Speaker 4: already been a lot of noise around the both parties

89
00:05:26,400 --> 00:05:30,599
Speaker 4: desired to amend the constitution and insert the Japan Self

90
00:05:30,600 --> 00:05:35,480
Speaker 4: Deforces Defense Forces name into the Constitution. There's also talks

91
00:05:35,520 --> 00:05:41,760
Speaker 4: of completely overhauling the defense export rules that currently permit

92
00:05:41,839 --> 00:05:45,919
Speaker 4: only five categories of exports. So there's clear moves already

93
00:05:46,120 --> 00:05:50,440
Speaker 4: and a sense that this new government arrangement will be

94
00:05:50,560 --> 00:05:55,440
Speaker 4: much more conservative and also hawkish on defense and security policy,

95
00:05:56,040 --> 00:05:59,960
Speaker 4: and that could affect how certain parties vote in the diet.

96
00:06:00,080 --> 00:06:03,479
Speaker 4: The same time, because the minority government is only a

97
00:06:03,520 --> 00:06:07,040
Speaker 4: few seats shy of the of the majority line, there

98
00:06:07,080 --> 00:06:10,599
Speaker 4: are a couple of conservative small conservative parties and also

99
00:06:10,680 --> 00:06:13,359
Speaker 4: independents who might be actually more willing to work with

100
00:06:13,440 --> 00:06:16,279
Speaker 4: a government that's willing to go beyond what the LDP

101
00:06:16,520 --> 00:06:18,640
Speaker 4: was able to do with a party like Kometo.

102
00:06:19,279 --> 00:06:21,880
Speaker 2: That was zen Taaro Nishi Muda, senior associate from the

103
00:06:21,880 --> 00:06:25,600
Speaker 2: Asia Group's Japan Practice, speaking of Bloomberg's April Honkan Annabel

104
00:06:25,680 --> 00:06:29,520
Speaker 2: Jewelers on the Asia Trade. Coming up is Sanae Takaichi,

105
00:06:29,600 --> 00:06:32,640
Speaker 2: Japan's new Iron Lady. We'll hear more from Bloomberg opinion

106
00:06:32,640 --> 00:06:43,960
Speaker 2: columnists Gar road Reading. Welcome back to the Daybreak Asia podcast.

107
00:06:44,200 --> 00:06:47,599
Speaker 2: I'm Dan Schwartzman. Doug Krisner's off this week. As you

108
00:06:47,640 --> 00:06:50,400
Speaker 2: already heard, Sanae A. Takaichi has just been confirmed to

109
00:06:50,520 --> 00:06:53,720
Speaker 2: Japan's first female prime minister. But more important than her

110
00:06:53,800 --> 00:06:57,159
Speaker 2: gender might be her taste for headbanging in music and politics.

111
00:06:57,440 --> 00:07:00,880
Speaker 2: That's according to Bloomberg opinion columnist road Read. He spoke

112
00:07:00,920 --> 00:07:03,000
Speaker 2: about it with Bloomberg Xander Bell Drulers in April.

113
00:07:03,080 --> 00:07:03,240
Speaker 4: Hun.

114
00:07:03,560 --> 00:07:06,240
Speaker 5: I love this connection that you're making so drawer out

115
00:07:06,279 --> 00:07:08,480
Speaker 5: for us, and I think at least we can say

116
00:07:08,720 --> 00:07:11,240
Speaker 5: we know that she likes playing the drums to relieve stress.

117
00:07:11,240 --> 00:07:13,200
Speaker 5: I'm sure she's had a lot to want to pick

118
00:07:13,240 --> 00:07:15,640
Speaker 5: the sticks up on in the last ten days.

119
00:07:17,240 --> 00:07:20,119
Speaker 1: Well, actually, to your point there, Tuki, she herself says,

120
00:07:20,200 --> 00:07:21,600
Speaker 1: or has said in the past, that she does not

121
00:07:21,720 --> 00:07:24,280
Speaker 1: get stressed from work. She says that all of her

122
00:07:24,280 --> 00:07:28,480
Speaker 1: stress comes from her domestic responsibilities, but Obviously she's in

123
00:07:28,480 --> 00:07:30,360
Speaker 1: a bit of a bigger role now, so let's see

124
00:07:30,360 --> 00:07:34,040
Speaker 1: how she handles that. Yeah, so I'm trying to draw

125
00:07:34,040 --> 00:07:38,520
Speaker 1: the line here between her choice in music and her

126
00:07:39,280 --> 00:07:43,600
Speaker 1: way of conducting herself. The football manager Jurgen Club, one

127
00:07:43,600 --> 00:07:46,080
Speaker 1: of the most successful football managers in the past decade.

128
00:07:46,440 --> 00:07:50,640
Speaker 1: He described his way of playing football, this high intensity,

129
00:07:50,960 --> 00:07:54,240
Speaker 1: high pressure game of football, as a heavy metal football.

130
00:07:54,480 --> 00:07:57,440
Speaker 1: So I'm attempting to coin heavy metal politics as the

131
00:07:57,440 --> 00:08:01,280
Speaker 1: way the Taki. She will do things high intense, high pressure,

132
00:08:01,440 --> 00:08:04,679
Speaker 1: and we saw that with her willingness to take risk

133
00:08:04,840 --> 00:08:07,760
Speaker 1: in order to become Prime Minister in the first place,

134
00:08:08,040 --> 00:08:12,640
Speaker 1: allowing longtime coalition partner Colmeto was to leave the coalition

135
00:08:12,960 --> 00:08:17,560
Speaker 1: and to join a new risky coalition with Ishian. That

136
00:08:17,840 --> 00:08:19,760
Speaker 1: is maybe a sign of some of the risk taking

137
00:08:19,760 --> 00:08:21,560
Speaker 1: and some of the bold choices that we'll see her

138
00:08:21,600 --> 00:08:23,480
Speaker 1: taking now that she has the top job.

139
00:08:25,600 --> 00:08:28,320
Speaker 3: How might this inform as well, not just how she

140
00:08:28,480 --> 00:08:33,680
Speaker 3: engages with opposition parties or party rivals, but with the

141
00:08:33,800 --> 00:08:38,800
Speaker 3: US President, because that meeting might be among the immediate

142
00:08:38,840 --> 00:08:40,360
Speaker 3: priorities for her next week.

143
00:08:41,840 --> 00:08:45,320
Speaker 1: Yes, it's certainly quite unusual, I think for a Japanese

144
00:08:45,360 --> 00:08:50,800
Speaker 1: Prime Minister to become Prime Minister, and within less than

145
00:08:50,800 --> 00:08:54,360
Speaker 1: a week, I think she will probably be meeting with

146
00:08:54,640 --> 00:08:59,360
Speaker 1: President Trump, and obviously at a time of some tension.

147
00:09:00,440 --> 00:09:03,040
Speaker 1: You know, there's a lot of not too much tension

148
00:09:03,120 --> 00:09:06,000
Speaker 1: on the surface, shall we say, But obviously there's still

149
00:09:06,000 --> 00:09:08,600
Speaker 1: a lot of things to work out with the trade

150
00:09:08,640 --> 00:09:13,559
Speaker 1: deal that was agreed earlier with the Ishiba administration. So far,

151
00:09:13,600 --> 00:09:17,520
Speaker 1: I think the signs are are pretty positive. Unfortunately, Takichi,

152
00:09:17,559 --> 00:09:19,480
Speaker 1: to the best of my knowledge, does not play golf,

153
00:09:19,920 --> 00:09:23,400
Speaker 1: unlike her mentor the legions of Abe, who obviously struck

154
00:09:23,640 --> 00:09:26,840
Speaker 1: a great relationship with President Trump on the golf course.

155
00:09:27,040 --> 00:09:29,360
Speaker 1: But I do think that they'll probably have a lot

156
00:09:29,440 --> 00:09:34,000
Speaker 1: in common. The President is known to like, you know, characters,

157
00:09:34,080 --> 00:09:37,640
Speaker 1: I think like Takeichi will be people who profess to

158
00:09:37,640 --> 00:09:41,880
Speaker 1: be patriots as she does. So I don't envision too

159
00:09:41,920 --> 00:09:45,200
Speaker 1: much immediate tension there. But obviously there is a lot

160
00:09:45,360 --> 00:09:48,760
Speaker 1: to hammer out with the trade deal that the previous

161
00:09:48,800 --> 00:09:52,000
Speaker 1: government signed on to. I think one good sign that

162
00:09:52,040 --> 00:09:56,640
Speaker 1: we saw on that is that Takeichi has retained the

163
00:09:56,840 --> 00:10:01,040
Speaker 1: services of the Minister in charge of of signing that

164
00:10:01,120 --> 00:10:03,920
Speaker 1: trade deal, Rios Akazawa, who is now going to be

165
00:10:03,920 --> 00:10:06,600
Speaker 1: in charge of the trade ministry, so she'll be able

166
00:10:06,760 --> 00:10:09,360
Speaker 1: to lean on his knowledge of that deal.

167
00:10:11,800 --> 00:10:15,800
Speaker 5: Another immediate challenge is also going to be quelling some

168
00:10:15,880 --> 00:10:19,439
Speaker 5: concerns around cost of living crisis, for instance, just inflation

169
00:10:19,640 --> 00:10:24,319
Speaker 5: generally sticking with that idea of her love for the drums,

170
00:10:24,360 --> 00:10:27,160
Speaker 5: do you think that that's something that can help endear

171
00:10:27,280 --> 00:10:29,560
Speaker 5: her to devoters in any way?

172
00:10:31,400 --> 00:10:34,960
Speaker 1: I do think she she has two challenges, as you say, so.

173
00:10:35,160 --> 00:10:38,160
Speaker 1: The first one has to be tackling inflation. And she

174
00:10:38,240 --> 00:10:41,880
Speaker 1: said as much herself at her first press conference last night,

175
00:10:41,920 --> 00:10:45,319
Speaker 1: where I thought she conducted herself quite well. She shied

176
00:10:45,360 --> 00:10:50,120
Speaker 1: away from, you know, any suggestions of controversial areas, came

177
00:10:50,160 --> 00:10:53,440
Speaker 1: off as being very pragmatic. I think that's one fear

178
00:10:53,559 --> 00:10:57,960
Speaker 1: that maybe some sections have. Is she going to, you know,

179
00:10:58,040 --> 00:11:04,439
Speaker 1: to go down some of her more nationalistic shall we say, tendencies.

180
00:11:04,640 --> 00:11:07,079
Speaker 1: She kept all of that in check anyway last night.

181
00:11:07,640 --> 00:11:09,760
Speaker 1: But she does need to do something. She needs to

182
00:11:09,800 --> 00:11:13,080
Speaker 1: be seen to be doing something to tackle inflation, and

183
00:11:13,200 --> 00:11:17,640
Speaker 1: especially tackling inflation at the checkout food. Inflation is the

184
00:11:18,360 --> 00:11:22,760
Speaker 1: big thing that is stressing voters out, shall we say.

185
00:11:24,360 --> 00:11:26,600
Speaker 1: She has said that's going to be her top priority.

186
00:11:26,679 --> 00:11:29,240
Speaker 1: Let's see how much she could actually get done. Ishibo

187
00:11:29,360 --> 00:11:32,280
Speaker 1: was also attempting to tackle it. Didn't really get much

188
00:11:32,559 --> 00:11:35,280
Speaker 1: done in the end, talked a lot about these cash

189
00:11:35,280 --> 00:11:39,160
Speaker 1: handouts that are now not going to happen. Takechi is

190
00:11:39,160 --> 00:11:43,640
Speaker 1: now going to compile an extra budget, and top top

191
00:11:43,800 --> 00:11:46,560
Speaker 1: line item in that budget has to be something that

192
00:11:46,679 --> 00:11:49,200
Speaker 1: is going to that household are going to be able

193
00:11:49,200 --> 00:11:52,160
Speaker 1: to feel that is going to help them feel better

194
00:11:52,240 --> 00:11:54,080
Speaker 1: about the inflation that Japan is undergoing.

195
00:11:54,800 --> 00:11:58,280
Speaker 2: That was Bloomberg Opinion columnist Gerode Reedy speaking to Bloomberg's

196
00:11:58,280 --> 00:11:59,840
Speaker 2: April Hunk and Annabelle Drulers.

197
00:12:01,840 --> 00:12:05,200
Speaker 4: Thanks for listening to today's episode of the Bloomberg Daybreak

198
00:12:05,360 --> 00:12:06,880
Speaker 4: Asia Edition podcast.

199
00:12:07,200 --> 00:12:10,359
Speaker 3: Each weekday, we look at the story shaping markets, finance,

200
00:12:10,679 --> 00:12:12,840
Speaker 3: and geopolitics in the Asia Pacific.

201
00:12:13,080 --> 00:12:16,360
Speaker 2: You can find us on Apple, Spotify, the Bloomberg Podcast

202
00:12:16,440 --> 00:12:19,800
Speaker 2: YouTube channel, or anywhere else you listen. Join us again

203
00:12:19,840 --> 00:12:23,120
Speaker 2: tomorrow for insight on the market moves from Hong Kong

204
00:12:23,240 --> 00:12:25,319
Speaker 2: to Singapore and Australia.

205
00:12:25,760 --> 00:12:28,239
Speaker 4: I'm Doug Chrisner, and this is Bloomberg