Sept. 20 (Bloomberg) -- Shinzo Abe was elected head of Japan's ruling Liberal Democratic Party today, ensuring he will succeed Junichiro Koizumi as prime minister next week.

Abe, Koizumi's chief cabinet secretary, won 66 percent of the votes of party legislators and rank-and-file members, beating Foreign Minister Taro Aso and Finance Minister Sadakazu Tanigaki for the job of running the world's second largest economy. Abe, who will turn 52 tomorrow, will become Japan's youngest leader since World War II.

By winning the vote as party president, Abe will become Japan's 57th prime minister when the legislature votes on Sept. 26, because of the LDP's parliamentary majority. He will inherit an economy headed for its longest expansion in 60 years and policies that last September helped Koizumi win the biggest lower-house majority in 15 years. Abe will need to reduce the world's biggest public debt and mend deteriorating ties with China and South Korea.

``Abe will have to play a political game quite different from Koizumi,'' said Gerald Curtis, author of ``The Japanese Way of Politics'' and a professor of political science at Columbia University in New York. ``Koizumi brought a lot of hope to the public. Abe's been pretty vague about what he wants to do.''

Abe won 464 of 702 valid votes in today's election. Aso received 136 votes and Tanigaki got 102.

`Reduce Spending'

In a press conference following the contest, Abe reiterated his intention to cut government spending, suggested that the Bank of Japan keep interest rates low and said he will call a special parliamentary session to consider education reform.

``We must do our utmost to reduce spending,'' he said. ``We want the Bank of Japan to support our economic reform efforts with its monetary policy.''

The central bank in July raised its benchmark lending rate to 0.25 percent, the first increase in almost six years. The move boosted the cost of servicing Japan's government debt, the largest in the world.

In a Sept. 18 interview Abe said he was ``committed'' to doubling foreign investment in Japan in four years and plans to submit a bill to parliament next year to promote investment from overseas.

Foreign direct investment surged 90 percent to 4.03 trillion yen ($34.2 billion) in the year ended March 31, 2005.

``Regulations that are blocking investment into Japan should be removed,'' he said in the interview. ``We will certainly accelerate reforms.''

Following Koizumi

Koizumi, 64, will leave after five and half years in office, the third-longest term since World War II. When he was elected, Japan was in deflation and its third recession in a decade. Koizumi cut government spending and pushed banks to write off bad loans. He broke with tradition by naming cabinet members without consulting party leaders.

When lawmakers in August last year rejected legislation to sell the state-run postal system, Koizumi dissolved the lower house of parliament and expelled 37 party members who voted against the plan. He won the election five weeks later.

His popularity also derived from his personality. He published a weekly online column called ``Lion Heart,'' a reference to his mane-like, permed hairstyle and recorded an album of his favorite Elvis Presley songs.

``It's very difficult to be the kind of politician Koizumi was, and outdoing Koizumi will be even more difficult,'' said Koichi Nakano, political science professor at Sophia University in Tokyo. ``Koizumi's been preparing Abe for some time. He's got a hard act to follow.''

U.S.-Japan Relations

Koizumi also enjoyed a close relationship with U.S. President George W. Bush, who cited their friendship frequently in speeches and provided him with a private tour of Presley's mansion during the Japanese leader's final visit to the U.S. as head of state. An administration spokesman said the tie between the two countries was unlikely to change.

``We have worked closely with Mr. Abe in his capacity as chief cabinet secretary and we look forward to working with him in the future to further the Japanese-U.S. alliance,'' said Frederick Jones, spokesman for the White House National Security Council.

Abe is the grandson of the late Prime Minister Nobusuke Kishi and son of former Foreign Minister Shintaro Abe. Shinzo Abe was first elected to the lower house of parliament in 1993 and has been re-elected four times. He was appointed chief cabinet secretary, the government's top spokesman, on Oct. 31 last year.

Koizumi's visits to Tokyo's Yasukuni shrine have antagonized China and South Korea, who have refused to hold summits with him. Among the 2.5 million people enshrined at Yasukuni are 14 men convicted of war crimes.

China urged Abe to make ``concrete efforts'' to improve relations between the two countries, Qin Gang, a Foreign Ministry spokesman said in Beijing today in a statement on a government Web site.

`Both Sides'

Abe in his interview said economic relations with China are strong and that improving diplomatic ties will require as much effort from Beijing as Tokyo. He also called China's military spending a ``concern.''

``Japan's investment in China rose by 20 percent in 2005 from 2004,'' he said. ``If relations were bad, this wouldn't have happened. Both sides need to make efforts for summits to resume.''

A further deterioration in ties between Asia's two biggest economies will be a concern in the U.S., and Abe is going to have to work to improve relations, Columbia University's Curtis said.

``China can't go around lecturing Abe,'' he said. ``But there's no way to push history aside. If Japan-China relations continue to deteriorate on the political side, and it's because Japan won't face up to what it did to Asia in World War II, the country that was bombed at Pearl Harbor is going to have something to say about it.''

To contact the reporter on this story: John Brinsley in Tokyo at jbrinsley@bloomberg.net

Last Updated: September 20, 2006 12:47 EDT