Tokyo governor promises ‘Yurinomics’ to jumpstart Japan’s economy
Tokyo — Tokyo governor Yuriko Koike’s new party unveiled on Friday what it calls "Yurinomics" — policies to revitalise Japan’s economy while cutting reliance on the aggressive spending and monetary easing that are central to Prime Minister Shinzo Abe’s strategy.
Launched less than two week’s ago, Koike’s Party of Hope will take on Abe’s ruling coalition in a national election called for October 22.
It has made populist calls to freeze a scheduled sales tax hike in 2019 and phase out nuclear power, as part of an effort to set itself apart from the government on key issues, but the fresh approach on the economy was given its own catchy name.
"We’ll carry out ‘Yurinomics’ that brings out private-sector vitality, without relying excessively on monetary easing and fiscal spending," the Party of Hope said at a policy launch.
"While maintaining the Bank of Japan’s (BoJ’s)massive monetary easing for the time being, the government and the BOJ should work together to seek a smooth exit strategy," it added.
"Yurinomics" is a piece of political branding to counter "Abenomics" — the name given to the aggressive monetary and fiscal stimulus measures and structural reforms that Abe has adopted since returning to power in December 2012.
Five years on, Abe’s government can point to some signs that his strategy is finally fostering stronger economic growth and defeating deflation.
Appointed by Abe, BoJ governor Haruhiko Kuroda still wants to give his money-printing ways more time to work, whereas the Hope party wants to debate a strategy for smoothly ending the massive quantitative easing.
Abe announced the snap election last week in the hope that his Liberal Democratic Party (LDP)-led coalition would keep its majority in parliament’s lower house, where it held a two-thirds "super majority" before the chamber was dissolved.
Pitched as a "reformist, conservative" alternative to Abe’s equally conservative LDP, Koike’s Hope party has clouded the outlook amid signs voters are disillusioned with Abe after nearly five years in power.
"By putting monetary policy on the table, Koike’s platform could spur debate among a lot of lawmakers about the need to fix some of the things they think are wrong, and quantitative easing could be a candidate," said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.
"Right now, the market impact is limited because the chances of her party forming a government are low. But there are a lot of assumptions built into the markets that the yen will remain weak due to quantitative easing. We still don’t know for certain how voters will vote," he said.
We’ll carry out ‘Yurinomics’ that brings out private-sector vitality, without relying excessively on monetary easing and fiscal spending
Tax firms, pay households
The new party says "Yurinomics" — derived from Koike’s first name — will focus on deregulation and tax firms’ massive internal reserves — worth about ¥300-trillion, to encourage them to put unused cash to better use.
It will also freeze the scheduled sales tax hike in 2019 and help low-income households with a "basic income" policy that regularly pays a set amount of money to all citizens.
While the Party of Hope’s conservative approach on defence and constitutional reform resembles that of Abe’s LDP, its economic policy has a more populist streak by focusing on distributing wealth to households, analysts say.
"Some of the economic policies seem unrealistic," said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.
"Basic income is being called for in some countries facing growing social inequality, so I’m not totally rejecting the idea. But without a secure source of revenue, it’s simply impossible," he said.
Abe’s ruling coalition has pledged to proceed with the sales tax hike and use the revenues for child care and education. The premier also hopes to convince voters that his strategy has succeeded in reflating the economy.
Koike said her party would build on Abenomics and ensure more households felt the benefits of the economic recovery.
"To make the economic recovery real, however, we need to carry out a more meticulous economic policy and social reform that would strike people’s heart," she told a news conference.
In the news conference, Koike repeated that she would not run for a seat in the lower house in the coming election.
Koike, a former defence minister and member of Abe’s LDP, has not made clear whom her party would back as prime minister after the election.
She defied the LDP to run for governor in 2016, defeating the ruling party candidate by a landslide and then leading her small local party to a huge victory on a reformist platform in a July Tokyo assembly election this year.