Japan's new 'Iron Lady' Sanae Takaichi set to unveil Cabinet | East Asia Tonight (Oct 6)

Key Concepts

• Sanae Takaichi: Japan's presumptive next Prime Minister, LDP leader, "Iron Lady," protégé of Shinzo Abe, proponent of "Abenomics 2.0."
• Abenomics 2.0: Expected return to easy monetary policies and fiscal stimulus, building on Shinzo Abe's economic strategies.
• Peripheral Immune Tolerance: A mechanism by which the human immune system is regulated by T-cells to prevent it from attacking the body's own tissues.
• De Minimis Exemption: A trade rule that allows low-value goods to enter a country duty-free, recently scrapped by the US for certain imports.
• Comprehensive Strategic Partnership (CSP 2.0): An upgraded bilateral agreement between Singapore and Australia/New Zealand, expanding cooperation across various sectors.
• Ransomware Attack: A type of cyberattack where malicious software encrypts data, demanding payment for its release.
• Fiscal Responsibility/Primary Balance: Government efforts to manage debt and ensure that revenues cover non-interest expenditures.
• Hawkish Perception: A strong, aggressive stance, particularly in foreign policy or economic matters.

East Asia Tonight Headlines

The broadcast opens with top stories: Japan's Sanae Takaichi weighing cabinet posts and coalition expansion, her win causing market shockwaves (stocks/yields soar, yen plunges), North Korean leader Kim Jong-un inspecting a new naval destroyer, China's $30 million emergency aid for Typhoon Matmo cleanup in Guangdong and Hainan, and a Mount Everest blizzard leaving 200 stranded with one fatality. The 2025 Nobel Prize in Physiology or Medicine was awarded to Shimon Sakaguchi and two others for discoveries on immune system regulation. Cultural highlights include Chinese communities marking Mid-Autumn Festival and Hong Kong's century-old fire dragon dance.

Japanese Politics: Sanae Takaichi's Premiership

Sanae Takaichi, expected to be Japan's first female Prime Minister, won a tightly contested leadership race for the Liberal Democratic Party (LDP). A political veteran and protégé of the late Shinzo Abe, she has vowed to revive his "Abenomics" policies.

• Cabinet and Party Appointments: Local media reports indicate key appointments:

  • Secretary General: Shuni Suzuki (former Finance Minister 2021-2024), son of former PM Zenko Suzuki, brother-in-law of former PM Taro Aso. Aso is considered a "kingmaker" for Takaichi's win.
  • Chair of General Council: Haruko Ariimura (from the Aso faction, the LDP's only remaining faction after political fund scandals).
  • Diet Affairs: Hiroshi Kajyama (former Minister of Economy, Trade and Industry).
  • Chairman of Policy Council: Takayuki Kobayashi (a former party presidential candidate, often compared to Takaichi for his "hawkish perception").
  • Controversial Appointment: Koichi Haguda is considered for acting Secretary General, despite being forced to leave a key party post in 2023 for not reporting political funds. He was reelected to the lower house without party endorsement.
  • Cabinet Appointments: Former Defense Minister Minoru Kihara is floated for Chief Cabinet Secretary, and former Foreign Minister Toshimitsu Motegi for Foreign Minister.

• Coalition Expansion and Challenges: Takaichi is considering expanding the LDP's coalition. Former PM Taro Aso reportedly met with the People's Democratic Party (third-largest opposition party) to explore cooperation, as a minority government needs support to legislate. Takaichi risks losing the LDP's long-time coalition partner, Komeito, whose leader Tatsu Saitto expressed concerns about her views on wartime history, the controversial Yasukuni shrine, immigration, and the LDP's political fund scandal (which contributed to LDP losses in three key elections).

• Gender Equality and Public Reaction: Takaichi's win as the first female LDP president is welcomed, breaking a "glass ceiling" in Japan (ranked 140th globally for women in national parliament, 15.7% in lower house, 29.4% in upper house). However, Takaichi's past statements suggest she doesn't believe women should be given opportunities solely due to gender, opposes different surnames for married couples, and is against a woman ascending the Chrysanthemum Throne. Despite this, some local media speculate she might appoint a record number of women to key party and cabinet posts, with the new chairperson of the general council expected to be a woman.

Japanese Economy and Market Reaction to Takaichi

Takaichi is seen as a "fiscal dove" favoring loose monetary policy, leading investors to anticipate "Abenomics 2.0."

• Market Movements:

  • Stocks: Nikkei 225 jumped nearly 5%, broader Topix gained about 3%, hitting record highs.
  • Yen: Weakened nearly 2% against the US dollar.
  • Yields: 30-year Japanese bond yields rose sharply, reflecting fears of further ballooning of Japan's colossal debt (over 200% of GDP).
  • Solar Power: Shares of solar power companies (Renova, West Holdings) saw sharp sell-offs (double-digit percentage drops) due to Takaichi's skepticism of solar energy, her calls for limits on large projects (citing foreign-made panels, environmental damage).

• Expert Analysis (Naomi Fink, Amova Asset Management):

  • Market Rally: Partially rational (expectation of fiscal stimulus, as Japan has made progress towards primary balance and has room for temporary stimulus) and partially "wishful thinking."
  • Policy Shift: Unlikely to be a drastic departure from previous administrations (Kishida, Ishiba) because the LDP is a minority government, requiring consensus and compromise with opposition parties.
  • Balancing Growth and Inflation: A difficult task. Current conditions differ significantly from 2012 Abenomics (then: deflation, stagnation, unemployment >4%, dollar-yen <100; now: rising inflation, labor supply shortage). Takaichi must respect the Bank of Japan's (BOJ) autonomy in controlling inflation.
  • BOJ Policy: Fink expects the BOJ to eventually hike rates to control inflation, as it's an independent central bank. The government has more "fine-tuned tools," such as raising the tax-free threshold on income, which could be a temporary measure. The goal is to protect real incomes, foster a virtuous circle of wages and prices, and move towards greater fiscal responsibility.
  • Japan as an Investment Story: Japan presents a strong structural story and opportunity, exiting deflation with phenomenal corporate profitability and nominal GDP growth. Core inflation has been above the BOJ's target for three years. However, controlling inflation to protect household real incomes remains crucial.

• Political Challenges (William Pesek, Columnist):

  • Immediate Priorities: Managing ties with the US (Takaichi talked about renegotiating US-Japan trade tariff agreement, weaker yen could clash with Trump administration), addressing the rise of a "Japanese MAGA party" (Sanoto party) and disillusionment among young Japanese about the economy.
  • Relations with Beijing and Seoul: Takaichi is a "China hawk," and being tough on China could be an easy way to excite the LDP rank and file.
  • Staying in Power: A major challenge is to remain in the leadership post for more than 12 months, as many Japanese prime ministers have a short tenure. Securing "wins" and party support is crucial for political longevity.

Regional News: Typhoon Matmo & Mount Everest Blizzard

• Typhoon Matmo: Cleanup is underway in southern China's Guangdong and Hainan provinces. $30 million in emergency aid has been set aside for recovery, mainly for repairing damaged infrastructure (roads, bridges, schools, hospitals). The typhoon forced the evacuation of nearly 350,000 people, packed winds over 150 km/h, and prompted the highest emergency response for flood control.
• Mount Everest Blizzard: Rescue operations continue on the eastern slopes of Mount Everest. Approximately 350 hikers are at the Tibet Everest base camp, and rescuers are in contact with another 200 potentially trapped at over 4,900 meters. One hiker died from hypothermia and altitude sickness in another mountainous region in western China, with over 100 others evacuated in northern Qinghai.

Business News: China's Fast Fashion & EU Trade

China's fast fashion industry is significantly impacting Europe's apparel market.

• Trade Shift: Chinese apparel makers are redirecting exports to the European Union to circumvent heavy US tariffs, particularly after the US suspended the "de minimis exemption" for low-value goods in August.
• EU Impact: In the first half of the year, China's apparel and textile exports to the EU increased 20% in both value and volume, with cheap clothing seeing a $2.3 billion jump. Online retailers Temu and Shein are shifting focus to Europe.
• EU Response: The EU has been slow to scrap its de minimis rule (parcels below €150 enter duty-free) but is discussing a €2 flat fee, which requires agreement from all 27 members. European apparel makers criticize this as too low compared to America's $80 fee.
• Trade Defenses: The EU plans to ramp up trade defenses against China, preparing to investigate 20 new anti-dumping cases. Both sides have imposed provisional duties, including China's 62.4% tax on European pork and Europe's up to 45.3% rate on Chinese EVs.

Business News: Asahi Ransomware Attack

Japan's largest brewer, Asahi, has resumed operations at its six domestic beer factories despite an ongoing system failure caused by a major ransomware attack.

• Operational Impact: The company is receiving orders manually via telephone and sales agents physically visiting clients. The system troubles began on September 29, hindering order reception and product shipment. While output at its 30 domestic factories was not directly affected, production had to stop due to the company-wide system problem.
• Investigation: Asahi has declined to disclose details about the attackers or their demands, stating that an investigation into the attack's extent and impact is ongoing. This incident is the latest in a series of cyberattacks targeting global companies.

Business News: K-Beauty and US Tariffs

South Korea's booming K-beauty industry faces new challenges from US tariffs.

• Growth and Market Position: Korean beauty product exports jumped 20% to a record $10.28 billion last year, driven by K-pop, K-dramas, and global skincare trends. South Korea is now the world's third-biggest exporter of beauty goods and the largest to the US.
• US Tariffs: The US scrapped its "no tax rule" for low-value goods in August, subjecting imported Korean cosmetics to a 15% tariff. This move could particularly hurt small and fast-growing indie beauty brands.
• Industry Response: Klemont Korea, which produces cosmetics for about a thousand brands, has factories in the US to manufacture some K-beauty products for the American market, mitigating tariff impact and reducing delivery times. Other brands, like startup Lily Cuffer (which created an AI/big data-powered skincare device), are confident they can withstand the tariffs due to K-beauty's popularity. US buyers are also seeking ways to mitigate the tariff burden.

Geopolitical Developments

• North Korea's Military Might: Kim Jong-un made a rare public visit to the Chon destroyer, calling it proof of Pyongyang's growing military power and readiness to act if provoked. The visit was part of a major military exhibition marking the 80th anniversary of the ruling Workers' Party, highlighting the progress of its modernized armed forces. This comes months after a Chon-class destroyer partially capsized during a failed launching ceremony in May.
• US Bill to Deter China on Taiwan: US Senator Jim Risch (R-Idaho) plans to introduce a bill to deter aggression against Taiwan using economic measures like sanctions and export controls, identifying both military and non-military targets. The idea is to have rapidly deployable retaliatory moves, drawing lessons from US sanctions against Russia. China's Foreign Ministry stated that the Taiwan issue is Beijing's internal affair and does not tolerate external interference, reiterating its stance of never renouncing the use of force for reunification.
• Australia-Papua New Guinea Defense Treaty: Australia signed a landmark mutual defense treaty with Papua New Guinea, seen as a move to counter China's expanding security presence in the Pacific. Australian PM Anthony Albanese called it a "historic agreement" and an "alliance of equals." The treaty obliges both nations to aid each other if attacked and allows up to 10,000 Papua New Guineans to serve with the Australian Defense Force. This is Australia's first security pact in over 70 years, beyond its formal alliances with the US and New Zealand. The Chinese embassy in PNG urged the country not to compromise its independence and to work with Beijing.
• Singapore's Elevated Ties with Australia and New Zealand: Singapore PM Lawrence Wong's official trip aims to elevate ties. With Australia, the Comprehensive Strategic Partnership will be upgraded to CSP 2.0, expanding cooperation in defense, supply chain agreements, AI, and clean energy R&D. Wong noted that US tariffs are impacting global trade, leading to falling business spending and confidence, which will affect Singapore's economy. He also highlighted interest in shifting production to Southeast Asia but stressed the need to reduce non-tariff barriers. The trip marks 60 years of relations. Singapore is seen as the "ASEAN gateway" for Australia and New Zealand. Wong also addressed the Optus (Singtel-owned) outage in Australia, which reportedly led to four deaths, emphasizing that Singapore's government expects its companies to comply with local laws and be responsible corporate citizens.

Nobel Prize in Physiology or Medicine

The 2025 Nobel Prize in Physiology or Medicine was jointly awarded to Japanese scientist Shimon Sakaguchi (74) and Americans Mary E. Bruna (64) and Fred Ramsdale (64). Their discoveries concern "peripheral immune tolerance," specifically how the human immune system is kept in check by T-cells, preventing it from attacking its own tissues. Sakaguchi made the first key discovery in 1995, Bruna and Ramsdale made another breakthrough in 2011, and Sakaguchi linked their work two years later. The jury stated their findings laid the foundation for a new field of research and spurred the development of new treatments for diseases like cancer and autoimmune conditions.

China's Arctic Expedition

China has completed its largest expedition in the Arctic Ocean, including its first manned deep dive below the Arctic polar ice. This was the world's first coordinated underwater operation in the polar region involving both a manned submersible and a remotely operated vehicle (ROV). Researchers collected hundreds of deep-sea samples and data on biodiversity, sea ice, and water chemistry, utilizing artificial intelligence combined with environmental DNA to identify deep-sea life. The US has expressed concern over China's growing presence in the Arctic, including its cooperation with Russia on joint Arctic patrols.

Cultural Festivals

• K-Food Street Festival in Singapore: The Korean Embassy in Singapore organized a K-Food Street Festival in Tanjong Pagar to strengthen 50 years of diplomatic ties through cuisine. The festival offers various Korean dishes and aims to connect people beyond government and business. A mural symbolizing Singapore-South Korea friendship was unveiled.
• Mid-Autumn Festival Celebrations:
  • Hong Kong: The Tai Hang neighborhood celebrated with a unique, century-old fire dragon dance. The 67-meter-long dragon, made of over 10,000 burning incense sticks, is a tradition thriving for over 140 years, commemorating a triumph over a plague.
  • Japan (Tsukimi/Moon Viewing): People honored the autumn moon with "Tsukimi" (moon viewing) festivals, featuring small gatherings, poetry, and music. Tokyo's Shimokita Zawa district hosted its annual Moon Art Festival, with glowing installations and immersive performances, including Luke Jerram's 7-meter-wide "Museum of the Moon" installation. The event saw record participation from over 100 local shops and double the number of visitors, boosting local businesses.

Conclusion

This East Asia Tonight broadcast highlighted a dynamic period across the region, marked by significant political transitions, economic shifts, and geopolitical realignments. Japan's presumptive new Prime Minister, Sanae Takaichi, faces immediate challenges in forming a stable government and navigating complex economic policies, with markets reacting strongly to her "Abenomics 2.0" stance. Geopolitical tensions are evident in North Korea's military posturing, US efforts to deter China regarding Taiwan, and new defense pacts like Australia-PNG, all against the backdrop of intensifying US-China strategic competition. Economically, global trade is being reshaped by US tariffs, impacting industries like China's fast fashion and South Korea's K-beauty, while a major cyberattack hit Japan's Asahi. The broadcast also celebrated scientific achievement with the Nobel Prize in Physiology or Medicine and showcased rich cultural traditions through Mid-Autumn Festival celebrations and a unique K-Food festival, underscoring the blend of progress and enduring heritage in East Asia.