Asia
Political earthquake in Japan: Leadership race begins in LDP
Following major defeats in the House of Councillors elections after the House of Representatives elections, Prime Minister Shigeru Ishiba announced his resignation on Sunday, September 7, unable to withstand the intense pressure to step down from within the Liberal Democratic Party (LDP).
Having lost its majority in both the House of Representatives and the House of Councillors, the LDP-Komeito government will now move past the debate over who is responsible for this defeat and focus on building a new political system. However, establishing a system that will allow them to remain in power appears more difficult than ever. As the situation within the LDP becomes increasingly complex, some factions argue that the party’s future should be entrusted not to popular figures like Sanae Takaichi or Shinjiro Koizumi, but to lesser-known politicians.
The Ishiba–Koizumi Meeting
The expected outcome in political circles was once again quite dramatic. Some veteran Japanese journalists had predicted that Prime Minister Ishiba would resign before the special presidential election scheduled for the 8th. The fact that more than 120 LDP lawmakers called for an emergency election and nearly half of the prefectural assemblies took a similar stance indicated that his resignation was inevitable.
The Ishiba–Koizumi meeting, which took place at the Prime Minister’s Official Residence on the evening of September 6, determined the course of events. Ishiba held two-hour meetings, first with Vice President Yoshihide Suga and then with Minister of Agriculture, Forestry and Fisheries Shinjiro Koizumi. According to sources, Koizumi tried to persuade Ishiba by stating that the majority of the public wanted a presidential election, saying, “If the conflict continues, the LDP will surely split. You need to resign to maintain party unity.”
“The Same Faces Involved in the Resignation Drama,” Just Like Four Years Ago
These developments create a sense of déjà vu from four years ago. On August 31, 2021, Koizumi had persuaded then-Prime Minister Yoshihide Suga during a similar crisis, forcing him to change his election strategy. At that time, Suga was facing the risk of losing the presidential election, and to resolve the situation, Hiroyuki Moriyama, Chairman of the National Diet Affairs Committee (now Secretary-General), urged him to dissolve the Diet. Perhaps Koizumi’s persuasion efforts were effective, as Suga withdrew his bid for re-election and announced his resignation.
After the announcement, Koizumi met with Suga and told reporters in tears:
“I am very grateful.”
Meanwhile, Koizumi did not run in the LDP presidential election at that time, instead supporting Taro Kono along with Ishiba. Ishiba also decided not to run, and for this reason, the pair was dubbed the “Koishi-Kawa Alliance.” Kono later distanced himself from the coalition, but the “Koishi” alliance remains alive and strong. Looking at the drama surrounding this resignation announcement, it is clear that the same actors—Ishiba, Koizumi, Suga, and Moriyama—are involved, and the script so far is almost identical to that of four years ago.
However, the critical question this time is: Will Koizumi move from a supporting role to the lead?
Taro Aso’s Power and Reckoning
Another key factor that will determine the outcome of the presidential election is whether former Prime Minister Taro Aso (the party’s Vice President), one of the central figures in the camp that brought down Ishiba, will be able to lead in political affairs.
Aso holds a deep-seated animosity towards Ishiba. When the LDP suffered a crushing defeat in the 2007 House of Councillors elections, Ishiba harshly criticized then-Prime Minister Shinzo Abe, who was trying to stay in office, and called for his resignation.
Aso, an ally of Abe, was angered and said that someone who had once left the LDP had no right to say such a thing. Moreover, in 2009, as Aso was struggling with declining approval ratings following the Lehman Shock, it was Ishiba who publicly called for his resignation, despite still being a member of Aso’s cabinet.
In last year’s LDP presidential election, driven by his animosity for Ishiba, he supported Takaichi at the last minute in the second round of voting. Even when efforts to oust Ishiba emerged after the House of Councillors elections, he was more determined than even the members of the former Abe faction implicated in illegal funds.
Some younger LDP members were shocked by Aso’s attempt to mobilize the only remaining faction within the party to overthrow Prime Minister Ishiba. Some say it is a sign of an old man’s single-mindedness or a delusion.
It is uncertain whether Aso will be able to maintain his influence within the LDP going forward.
The Rise and Uncertainty of Sanae Takaichi
Sanae Takaichi, who gained prominence with the support of Shinzo Abe in last year’s LDP presidential election, narrowly lost to Ishiba in the second round. Now, with Ishiba’s resignation, Takaichi has once again become a strong candidate. However, her base within the party is weakening, especially since half of the lawmakers who supported her have withdrawn from politics due to slush fund scandals.
Furthermore, the rise of the People’s Party and the Conservative Party of Japan is drawing some of Takaichi’s hard-right supporters to these new forces. Although she still ranks high in public opinion polls, it is noteworthy that in some surveys, she lags behind Koizumi and even Ishiba.
Potential Candidates After Ishiba
The LDP’s loss of its majority in the Diet [the Japanese parliament] makes it imperative for the new leader to be a pragmatic figure capable of negotiating with opposition parties. The prominent candidates include:
- Yoshimasa Hayashi – Chief Cabinet Secretary, an experienced moderate conservative. He has good relations with the opposition. He is seen within the party as a “colorless, transparent, and risk-free” candidate.
- Katsunobu Kato – Minister of Finance, has extensive political experience but is not well-known among the public.
- Takeshi Saito – Former Minister of International Trade and Industry, a figure who stands out for his practical skills.
- Shinjiro Koizumi – Highly popular, but his youth and lack of experience raise questions.
- Sanae Takaichi – Although her public support is strong, the internal party dynamics could pose a challenge for her.
- Takayuki Kobayashi – Considered one of the LDP’s “promising young” faces.
The format of the election is also crucial. If a “full-scale” election is held where party members can vote, the race could be between popular figures like Koizumi, Takaichi, and Kobayashi.
The LDP’s Future and Public Distrust
In the press conference announcing his resignation, Prime Minister Ishiba expressed his regret at having to leave office without achieving his goals. However, his delay in making a decision after the election defeat and the resulting “50-day political vacuum” created disappointment among the public.
For the Japanese people today, the real issue is not the LDP’s internal score-settling, but the establishment of a system that can provide solutions to fundamental problems such as the economy, inflation, energy security, and foreign policy. However, if this process gets bogged down in internal party power struggles, public trust in the LDP will be further eroded. In Ishiba’s own words:
“If the LDP loses the trust of the people, Japanese politics will easily surrender to populism.”
This warning indicates that Japanese politics is heading towards a major turning point in the coming period.
Asia
Pentagon plans covert spy ring for economic war on China, report says
The US Department of War (Pentagon) is reportedly planning to establish an extensive network of deep-cover agents to wage economic warfare against China and other adversaries of the US.
According to a report by The Washington Post citing six sources familiar with the initiative, the plan has not yet been put into effect. The newspaper reported that the initiative remains at the planning stage. The Pentagon, however, denies that any such initiative exists.
The report said the operatives would pose as entrepreneurs or private sector employees while concealing their ties to the US government. The network’s mission would be to gather economic intelligence and counter China.
The programme is led by Tom Rakusa, who spent 39 years at the CIA. Rakusa serves as a senior adviser to Deputy Secretary of Defence Steve Feinberg.
The proposed spy network is seen as part of a broader policy by the Donald Trump administration to sharpen economic competition with other countries.
The US is already resorting to tariffs, export controls, and investment in strategic sectors, alongside expanding its economic intelligence gathering.
According to The Washington Post, the new initiative demonstrates the Pentagon’s growing influence under the Trump administration. The department is currently seeking a record budget of $1.5 trillion.
Trade war flares up again with Trump’s return to the White House
The trade friction between the US and China flared up again following Donald Trump’s return to the White House. In April 2025, Washington raised tariffs on Chinese goods to as much as 145%, and Beijing retaliated with tariffs of up to 125%.
In May, US Secretary of State Marco Rubio described China as the primary geopolitical challenge facing Washington. Rubio said that to avoid war, the two sides needed to manage their conflict of interests.
In July, Chinese expert Zheng Yongnian did not simply warn that underestimating the US could prove to be a “fatal mistake”; he stated it explicitly.
According to Zheng’s assessment, the US maintains its primacy through the role of the dollar, its military superiority, and its technological advantages.
Even so, the two sides agreed in June to declare a truce and lower tariffs. In autumn 2026, the US and China extended their trade truce until 10 January 2027.
US Treasury Secretary Scott Bessent said the extension would give the parties more time to discuss economic issues.
Trade deals do not eliminate the strategic contradictions between the two countries. Financial Times columnist Rana Foroohar likened the race between the two nations for commercial, technological, and geopolitical influence to the 19th-century “Great Game” between the Russian and British empires.
Foroohar cited China’s standing in shipbuilding and commercial maritime transport, as well as its expanding footprint in overseas ports, among its key advantages.
Asia
Japan plans curbs on short-term home sales to cool urban prices
Japan’s ruling Liberal Democratic Party (LDP) plans to restrict short-term property trading to rein in surging home prices in major urban centres, particularly Tokyo.
Led by Prime Minister Sanae Takaichi, the party aims to make support for working households a core priority ahead of local elections scheduled for April next year.
The LDP’s research commission on housing and land policy met on Wednesday to discuss the issue.
According to a report by the Nikkei Asia newspaper, Commission Chair and LDP lawmaker Midori Matsushima said at the opening of the meeting: “Prices of newly built condominiums across Tokyo’s 23 wards have doubled over the past decade. We must work on measures ensuring that people who wish to live in these homes can actually afford to buy them.”
Homeownership in the capital has become virtually unattainable for broad segments of the population. According to data from the Real Estate Economic Institute, the average sale price of a newly built condominium in Tokyo’s 23 wards rose %18.5 in fiscal 2025 compared with the previous year, reaching 137.84 million yen (around $872,000).
Meanwhile, statistics from the Ministry of Labour show that the average annual income of a full-time worker in the capital remained at 6.78 million yen in fiscal 2025. This widening gap between incomes and residential property prices is directly shaping political priorities.
During its campaign for the House of Representatives election in February, the LDP pledged to curb speculative transactions across metropolitan Tokyo and other regions. Earlier this month, a party project team focused on policies concerning foreign nationals also submitted a recommendation urging the government to introduce immediate tax measures against rising home prices.
Under current legislation, profits realized from properties sold within five years of acquisition are classified as “short-term capital gains”. These returns face a tax rate approaching %40, including income tax and local inhabitant tax.
Although this rate is twice the approximately %20 levied as “long-term capital gains” tax on properties held for more than five years, several party members argue it remains insufficient to deter speculation. Calls to tighten the framework may be considered as part of the annual tax reform package to be drafted in December alongside the LDP’s coalition partner, the Japan Innovation Party.
The ruling bloc wants to present concrete housing pledges to voters heading to the polls in April across numerous urban centres, including 22 of Tokyo’s wards where local assembly terms expire.
“We need to support families with children, who are typically at the stage of purchasing a home,” a senior LDP official said.
Opposition parties are also preparing alternative proposals that target not only prospective homebuyers, but also residents forced into the rental market by high property prices and now affected by escalating rents.
Tax steps take precedence over limits on foreign buyers
Several countries seeking answers to housing affordability pressures have imposed direct restrictions on foreign purchasers. In South Korea, real estate policies played a major part in the declining public approval ratings of President Lee Jae Myung.
In August 2025, authorities in Seoul introduced an approval requirement for foreign nationals buying homes in the capital and adjacent areas, while also mandating that buyers reside in the properties for at least two years.
Canada and Australia have enacted temporary bans on foreign residential purchases, while Singapore levies a %60 additional stamp duty on foreign buyers.
The role of overseas investors in Japan’s property market also drew debate during the February election. However, restrictions aimed directly at foreign nationals are viewed as potentially conflicting with international trade and services agreements.
Consequently, rather than imposing restrictions based on the nationality of buyers, the government is discussing tax measures aimed at speculative real estate deals, such as rapid resales.
Fears that sharp market measures could shake regional banks
Concerns have also surfaced that aggressive steps to force down prices could harm the wider national economy.
A senior LDP tax official cautioned that a steep drop in land prices could weaken local financial institutions, warning: “We must consider the impact on regional banks.”
The real estate sector accounts for roughly %18 of total lending by Japanese banks. This proportion sits well above the %10 level recorded during Japan’s bubble economy of the mid-to-late 1980s.
At certain regional banks, property lending accounts for nearly half of total loan portfolios.
According to March 2025 data from the Financial Services Agency, approximately one-quarter of all loans extended by regional banks to the real estate sector are concentrated directly in Tokyo’s five central wards.
Buoyant asset valuations, supported in part by rising stock indices, have underpinned strong public approval for the Takaichi administration. Observers note that property interventions designed to cool the market could drag down equity prices and weaken the government’s standing.
A senior official on the LDP research commission stressed that decision-makers must act with caution regarding the scope and timing of any measures intended to bring price increases under control.
Asia
South Korea plans $120B spend on eight US nuclear power plants
South Korea will spend $120 billion to construct eight nuclear power plants in the US under an agreement that provides for $350 billion in investments in exchange for lower tariffs.
The South Korean government also announced that Seoul and Washington will begin examining a liquefied natural gas (LNG) project in Alaska comprising a large-scale pipeline to transport natural gas from the north of the state to the south, alongside the construction of an LNG terminal for exports overseas.
Seoul stated that a decision regarding the LNG project will be made following a commercial feasibility study. However, US President Donald Trump said that South Korea would invest $54 billion in the project, pointing to an apparent lack of full coordination between the two sides on the matter.
Trade and Industry Minister Kim Jung-kwan said in a statement: “This announcement opens a new horizon of cooperation where the two countries join forces to develop joint commercial ventures in strategic areas directly linked to economic security and future sectors such as artificial intelligence, nuclear energy, and LNG.”
“We will adhere to the principle of prioritising national interests and investing solely in commercially viable projects,” Kim said.
Speaking at the White House, Trump characterised South Korea’s plans as “one of the largest energy infrastructure investments in American history”.
The announcement followed a meeting between Trump and South Korean President Lee Jae Myung roughly one year ago at the APEC Economic Leaders’ Meeting held in South Korea, where they agreed on the creation of a $350 billion investment fund.
Under that agreement, $150 billion was allocated to the shipbuilding sector and $200 billion to other sectors. In return, the US announced it would reduce tariffs imposed on goods imported from South Korea from 25% to 15%.
Under the nuclear power project, South Korea’s state-controlled utility will build two plants in the US, while Pennsylvania-based Westinghouse Electric will construct six plants.
According to the South Korean government, this will mark the first instance in which a foreign country builds its own nuclear power plants in the US.
South Korean firms are also evaluating the possibility of acquiring a stake in Westinghouse as part of negotiations over sharing profits generated by the project.
South Korea additionally announced that it will build a $22.3 billion natural gas-fired power plant in Texas with a capacity of 6,472 megawatts.
The facility will be designed to supply electricity directly to nearby data centres. The project’s first phase is targeted to begin commercial operations in 2029, with full-capacity operations slated for 2032.
Seoul also disclosed that it had agreed to allow the US to receive 50% of the profits generated by the projects until South Korea recoups all of its investments.
After South Korea fully recovers its total investment amount, 90% of the profits will go to the US.
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