Kan Survives as Japan's Leader With Vow to End Deflation Cycle
Kan Beats Ozawa in Japan Ruling Party Race, Remains Premier
Tomohiro Ohsumi/Bloomberg
Naoto Kan, Japan's prime minister and leader of the ruling Democratic Party of Japan, is greeted by other party lawmakers in Tokyo. Kan, 63, was re-elected head of the Democratic Party of Japan, defeating Ichiro Ozawa in a ballot that showed he has more support among rank-and-file members than lawmakers after losing control last month of parliament’s upper house.
Naoto Kan, Japan's prime minister and leader of the ruling Democratic Party of Japan, is greeted by other party lawmakers in Tokyo. Kan, 63, was re-elected head of the Democratic Party of Japan, defeating Ichiro Ozawa in a ballot that showed he has more support among rank-and-file members than lawmakers after losing control last month of parliament’s upper house. Photographer: Tomohiro Ohsumi/Bloomberg
Sept. 14 (Bloomberg) -- Andrew Colquhoun, head of Asia-Pacific sovereign debt at Fitch Ratings, talks about Japanese Prime Minister Naoto Kan victory in a leadership vote within his ruling party. He speaks from Hong Kong with Maryam Nemazee on Bloomberg Television's "On The Move." (Source: Bloomberg)
Sept. 14 (Bloomberg) -- Christian Takushi, fund manager at Swisscanto Asset Management AG, talks about Japan Prime Minister Naoto Kan's victory in a vote for control of the ruling party. He speaks from Zurich with Maryam Nemazee on Bloomberg Television's "On The Move." (Source: Bloomberg)
Japan’s Prime Minister Naoto Kan defeated a leadership challenge from party rival Ichiro Ozawa, who opposed his policy of keeping government spending in check to help rein in the world’s largest public debt.
The Democratic Party of Japan chose Kan over Ozawa in a membership election by a margin of 721-491. Legislators, local politicians and regional members cast ballots, with the votes of the first group counting more than the next two combined.
“I will do my utmost to establish a unified party system where everyone’s strengths are realized,” Kan said after the vote. “Thank you from the bottom of my heart.”
Kan’s win removes concern that an Ozawa-led government would drive bond yields higher by increasing borrowing to fund stimulus spending. Kan won 206 DPJ legislator votes, compared with 200 for Ozawa, underscoring the challenge he faces in uniting the party and enacting legislation to lower corporate taxes after losing control of the upper house in July.
“Kan will gain a mandate within the party now that he’s won,” said Airo Hino, political science professor at Waseda University in Tokyo. “But it’s hard to predict what Ozawa will do, depending on Kan’s personnel appointments. And the situation is unstable because the DPJ lacks an upper-house majority.”
The yen rose to a 15-year high of 83.09 against the dollar after the loss by Ozawa, who advocated selling the currency to reverse gains, and was trading at 83.41 at 3:56 p.m. in Tokyo. Yields on Japan’s benchmark 10-year bonds fell 4.5 basis points to 1.1 percent, having surged to an 11-week high of 1.195 percent last week on speculation Ozawa would prevail.
The public favored a Kan victory by a margin of about three to one. Sixty-seven percent of voters supported Kan while 23 percent chose Ozawa in a Kyodo News survey published Sept. 11. No margin of error was given.
To contact the reporter on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net
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