TOKYO — Prime Minister Sanae Takaichi’s coalition government has achieved a significant victory in the recent general election, paving the way for anticipated tax reductions and increased military spending to counter Chinese influence. This outcome has created some turbulence in financial markets.

Takaichi, a conservative and Japan’s first female prime minister, has drawn inspiration from Britain’s Margaret Thatcher and is projected to secure around 328 out of 465 seats for the Liberal Democratic Party (LDP) in the lower house.

The LDP was the only party to surpass the 233 seats needed for a majority just two hours after polls closed, indicating a record performance for the party.

Takaichi’s coalition, which includes the Nippon Ishin no Kai, holds a two-thirds supermajority, enabling her to override challenges in the Senate, which remains under opposition control.

Voters braving winter weather for elections

In the aftermath of the election results, Takaichi remarked in a TV interview that this election signifies a substantial shift in policies, most notably in economic and security strategies. She noted that these changes face considerable public opposition, but with enough public support, they must aggressively address these matters.

The 64-year-old leader called for an unusual winter snap election, seizing the opportunity presented by her rising approval ratings since taking over the LDP leadership late last year.

Voters have been drawn to her dynamic image, but her nationalist views and security focus have strained relationships with China. Additionally, her tax-cut promises have caused some concern among market observers.

Record snowfall in certain regions resulted in traffic disruptions, with some polling locations closing early, while others saw voters navigating through deep snow to cast their ballots. February elections were held under such unusual conditions for the third time since the war, as elections typically occur during calmer times.

At a polling station in Niigata Prefecture’s Uonuma, a teacher named Kazunari Naga, 54, braved frigid temperatures to support Takaichi and her party.

“I feel like she’s providing a clear direction. It seems like the entire country is uniting and moving forward,” Naga expressed.

However, Takaichi’s proposal to suspend the 8% sales tax on food to ease household burdens amidst rising prices has raised investor concerns regarding financing in a nation with the highest debt levels among developed countries.

On Sunday, Takaichi stated that she would speed up discussions surrounding the consumption tax cut, keeping fiscal sustainability in mind.

“Her plan raises significant questions about financing and the overall logistics,” highlighted Chris Scicluna, head of research at Daiwa Capital Markets in London.

Political stability and international dynamics

Yoshinobu Tsutsui, chairman of Japan’s leading business association, Keidanren, praised Takaichi’s win as a return to political stability, stating that the Japanese economy is at a crucial point for sustainable growth.

The LDP, which has governed most of Japan’s post-war era, recently lost its majorities in both legislative houses under Takaichi’s predecessor, Shigeru Ishiba.

Takaichi has successfully turned the party’s fortunes around by resonating with younger voters, even igniting a “Sanae Mania” trend, leading to high demand for her handbag and signature pink pen.

President Trump expressed his “full support” for Takaichi recently and extended an invitation for her to visit the White House next month.

Meanwhile, China is evaluating the election outcomes. Just weeks into her term, Takaichi publicly clarified Japan’s stance on a potential Chinese attack on Taiwan, easing long-standing tensions.

China has responded with various measures, including advising its citizens against traveling to Japan.

Taiwanese President Lai Ching-de quickly congratulated Takaichi, expressing hopes her victory could lead to a more prosperous future for Japan and its regional allies.

Takaichi’s strong mandate might expedite efforts to bolster Japan’s defense, which could further irritate Beijing, as it perceives her as attempting to rekindle militaristic ambitions.

Japan’s Defense Minister, Shinjiro Koizumi, stated that he aims to enhance national defense while maintaining dialogue with China.

“Beijing is not likely to favor Takaichi’s victory,” cautioned David Bowling from Asia Group, a firm that advises companies on geopolitical risks. “China must now acknowledge her firm position, realizing past strategies to isolate her have been ineffective.”