Japanese Finance Minister Set to Become Country's New PM

China Passes Japan as Second-Largest Economy
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Japan's ruling party elected Finance Minister Yoshihiko Noda its new leader, paving the way for him to become the country's sixth prime minister in the last five years.

Noda replaces outgoing premier Naoto Kan, who announced his resignation Friday after just 14 months in office amid mounting criticism over his government's handling of the triple disasters of the earthquake, tsunami and nuclear crisis.

Noda defeated Trade Minister Banri Kaieda by 215 votes to 177, in a runoff election held after the original five candidates failed to secure the 50 percent support necessary.

Known as a fiscal hawk, Noda inherits a host of economic problems, including a massive debt that is now more than twice the country's $5 trillion economy, the highest in the industrial world. He must also tackle a multi-billion dollar effort to rebuild the tsunami-ravaged coast, while dealing with the nuclear accident at the Fukushima Daichi Power Plant. Add to that, a divided party, and divided parliament, where the opposition Liberal Democratic Party controls the upper house.

Japan's Finance Minister Tapped to Become Latest Prime Minister "Let us sweat together for the sake of the people," Noda said, calling for unity among party members. "We face turbulent times, but I am ready to shoulder the burden."

Unlike most Japanese lawmakers, Noda does not come from a political family. The son of a Japanese Self Defense Force member, he is a career politician, elected to the lower house of parliament five times before becoming Finance Minister in June 2010.

As premier, Noda's most pressing concern will be the massive reconstruction effort stemming from the March 11 tsunami and earthquake. The disasters killed more than 20,000 people, and 100,000 people remain displaced nearly half a year later because of radiation concerns.

Noda has hinted at a consumption tax increase to help pay for the rebuilding effort, an unpopular solution at a time when the country is struggling economically. Just last week, Moody's credit rating agency downgraded Japan's credit rating, citing the country's debt, and the lack of a plan to revive the economy.

Yoshihiko Noda Set To Become Japan's Newest Prime Minister

"There's such a strong opposition within the DPJ for the tax increase any time soon," said Koichi Nakano, associate professor of political science at Sophia University. "Given that the LDP is breathing down their neck, it seems to be very risky to talk about tax increase prematurely, until the general election is over."

Noda is a staunch supporter of the U.S.– Japan security alliance, but has been cautious about China. While praising the rise of the world's second largest economy, he has expressed concerns over its growing military might.

Japan's political instability has undermined the country's ability to tackle serious problems, and there is little optimism that Noda will last longer than his predecessors, with another party leadership vote already scheduled for September next year.

The ruling party came to power two years ago after nearly half a century under the LDP, but the DPJ has failed to live up to expectations. Former Prime Minister Yukio Hatoyama resigned just eight months after taking office, while Kan last ed just over a year.

"Noda will have to be both lucky and gifted to get out of the cycle," Nakano said.

Expectations aren't high among voters either. Junya Yamashita, a financial planner, said Noda's experience as finance minister made him the most qualified among the candidates, but he wasn't getting his hopes up.

"Unfortunately, I don't expect a lot from the DPJ anymore," he said. "But Noda is better than Kan."

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