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Doubts already emerging over Japan's new PM

Published: 9:04PM Monday August 29, 2011 Source: Reuters

Finance Minister Yoshihiko Noda was chosen today to become Japan's sixth prime minister in five years.

Noda will have to overcome deep rifts in the ruling party if he is to make more of a mark than his predecessors.

He is considered a safe pair of hands to lead the world's third-biggest economy, but doubts run deep as to whether he will have sufficient support to stay in office long enough to tackle Japan's economic woes.

The 54-year-old Noda, who defeated Trade Minister Banri Kaieda in a run-off vote in the ruling party, must deal with a resurgent yen that threatens exports and forge a new energy policy while ending the worst nuclear crisis since Chernobyl.

Finding funds to rebuild from the March 11 tsunami also poses a challenge at a time when huge public debt has already triggered a credit downgrade.

No Japanese prime minister has lasted much more than a year since 2006, and most market players polled by Reuters this month thought the next Government head would be no exception.

Noda, who will be confirmed by Parliament on Tuesday, will be the third premier since his ruling Democratic Party of Japan swept to power in 2009.

Instead of a deep debate over how to jolt Japan out of decades of stagnation, the party vote had turned into a battle between allies and critics of Ichiro Ozawa, a 69-year-old political mastermind who heads the party's biggest group even as he faces trial on charges of misreporting political donations.

Bond markets welcomed the choice of Noda, who among the candidates was the only one consistently calling for Japan to face painful reforms to curb its massive debt.

China, US Ties

Noda's rise to the top job could cause friction with China after he said Japanese wartime leaders, convicted by an Allied tribunal after Japan's defeat in World War Two, were not "war criminals" under domestic law.

He has also said China's rapid military buildup pose a serious regional risk, and stressed the importance of the US-Japan security alliance.

"Noda's attitude towards China has in the past been somewhat hardline, and he has close relations with the United States, which would not bode well for China-Japan ties," said Sun Cheng, an expert on Japan at the China University of Political Science and Law.

"However, he has been compromising on his views, and I think he will want to maintain stability in China-Japan relations," Sun added.