Japan is witnessing a historic political moment as Sanae Takaichi, the country’s first woman prime minister, takes the helm amid a swirl of economic, security, and diplomatic challenges. In her inaugural policy speech to the Japanese Parliament on October 24, 2025, Takaichi laid out an ambitious agenda, signaling a sharp turn in both domestic and foreign policy priorities, according to reporting from Kyodo and Free Malaysia Today.
At the heart of her vision is a pledge to deepen Japan’s multilateral engagement with regional powers such as India, South Korea, the Philippines, and Australia. This move is designed to advance what Takaichi called a "free and open Indo-Pacific"—a phrase that has become something of a mantra for Japanese leaders wary of China’s growing military assertiveness. "The military activities of neighbouring countries—China, North Korea, and Russia—have become a grave concern," Takaichi warned in her address, as reported by Free Malaysia Today.
Yet, while Takaichi has a reputation as a China hawk, she struck a nuanced note regarding Japan’s largest neighbor. She described China as an "important neighbour" with whom Japan must foster "constructive and stable" ties, aiming for a "strategic and mutually beneficial" relationship. This delicate balancing act—asserting Japan’s security interests while keeping diplomatic channels open with Beijing—reflects the complexity of the region’s geopolitics.
Japan’s alliance with the United States remains, in Takaichi’s words, the "cornerstone" of the nation’s diplomatic and security policies. This relationship is set to take center stage again with the upcoming visit of former U.S. President Donald Trump, who has long pressed Tokyo and other allies to shoulder more of their own defense costs. Takaichi told Parliament she would build "a relationship of trust" during Trump’s visit, "elevating the Japan-US relationship to new heights," as cited by Free Malaysia Today.
One of the most striking announcements from her maiden speech was the decision to accelerate Japan’s defense spending. The previous target was to reach 2% of GDP by the 2027-28 fiscal year, but Takaichi now wants this achieved by March 2026—two years ahead of schedule. This move, she argued, is necessary to "proactively promote the fundamental strengthening of our nation’s defence capabilities" in response to "various changes in the security environment." She also committed to revising Japan’s three key security documents—the National Defence Strategy, Defence Buildup Program, and National Security Strategy—by the end of 2026, a shift expected to clear the path for even higher defense budgets.
But security is just one side of the coin. Japan’s economy, long plagued by stagnation and demographic decline, is facing fresh headwinds. Inflation has accelerated, with official data showing the consumer price index jumping to 2.9% in September 2025, up from 2.7% the previous month. Stripping out volatile items, the core inflation rate eased to 3.0% from 3.3%. Perhaps most painfully for ordinary Japanese, rice prices surged 48.6% year-on-year in September, a spike attributed to a scorching summer in 2023, panic-buying after a "megaquake" warning, and lingering supply disruptions.
Addressing these economic pressures, Takaichi has made tackling the rising cost of living her "top priority." She announced plans to abolish the provisional gasoline tax rate, in place since 1974, during the current Diet session, which runs through December 17, 2025. In a bid to boost household spending power, she also aims to raise the nontaxable income threshold from 1.03 million yen (about $6,700) to 1.60 million yen this year. The government will begin designing a new system that mixes income tax deductions with cash benefits for households, scrapping a previous plan to provide a flat 20,000 yen per person. "I will turn (people’s) anxieties about the present and future into hope and build a strong economy," Takaichi declared, as reported by Kyodo.
Takaichi has long advocated for aggressive fiscal policies and increased government spending to spur growth. Her appointment has already buoyed Japanese stocks to record highs, but she’s leaving monetary policy decisions to the Bank of Japan (BoJ), which has been gradually "normalising" its previously ultra-loose stance. "Overall, the big picture continues to be that price pressures appear to be reasonably firm," Abhijit Surya of Capital Economics told Free Malaysia Today.
Japan’s labor market is also under strain, with a shrinking population and persistent shortages in key sectors. Takaichi addressed this head-on, acknowledging the need for foreign workers to fill gaps but also noting public unease about immigration. "Some illegal activities and breaches of rules by certain foreigners have created situations where members of the public feel uneasy and perceive unfairness," she said. "While we draw a clear line from xenophobia, the government will respond resolutely to such acts," she added, pledging to enforce compliance with existing rules and examine sensitive issues such as land acquisition. This stance comes as the populist Sanseito party, which brands immigration as a "silent invasion," has made gains in recent elections.
On the international stage, Takaichi’s leadership has already drawn attention. Indian Prime Minister Narendra Modi was quick to congratulate her, emphasizing the importance of deepening India-Japan ties for peace, stability, and prosperity across the Indo-Pacific. "Heartiest congratulations, Sanae Takaichi, on your election as the Prime Minister of Japan. I look forward to working closely with you to further strengthen the India-Japan Special Strategic and Global Partnership. Our deepening ties are vital for peace, stability, and prosperity across the Indo-Pacific and beyond," Modi posted on X, as cited by Business Standard.
Public support for Takaichi’s cabinet is strong—at least for now. A poll published by the Yomiuri Shimbun on October 23, 2025, put her approval rating at 71%, the fifth-highest for a new cabinet since 1978. This gives her a rare window of political capital to push through her ambitious reforms, though the experience of her predecessor, Shigeru Ishiba—who lasted barely a year after being battered by voter anger over rising prices—serves as a cautionary tale.
As Japan’s first woman prime minister, Takaichi faces a daunting to-do list: balancing national security concerns with the need for stable relations in a volatile region, taming inflation without derailing growth, and steering a society that is both aging and increasingly anxious about change. Her tenure could mark a turning point—not just for Japan, but for the broader Indo-Pacific. The coming months will reveal whether her bold promises can translate into real results for a nation at a crossroads.