San Francisco Frontiers - Japan's Takaichi eyes expanding coalition, reports say

The Liberal Democratic Party (LDP) and its longstanding junior partner Komeito have been in a minority in the lower and upper chambers since recent elections, making it hard to pass legislation.

The conservative Takaichi, 64, became president of the LDP on Saturday and is expected to become Japan's first woman prime minister next week, replacing Shigeru Ishiba.

Takaichi the next day met Yuichiro Tamaki, who heads the Democratic Party for the People (DPP), with a view to expanding the coalition, the Yomiuri Shimbun and Mainichi Shimbun dailies reported.

Takaichi and Tamaki have in the past both put forward similar policies such as aggressive fiscal spending and tax cuts to boost the economy, as well as tougher rules around foreign workers.

Takaichi has also said she wanted to expand the existing coalition possibly before she officially becomes premier.

Her appointment buoyed stocks on Monday but bond yields rose on concerns that any major spending could further worsen Japan's public finances and fuel inflation.

An auction of 30-year Japanese government bonds that was closely watched for signs of investor jitters in the end drew solid demand.

Her appointment of Shunichi Suzuki, a former finance minister, as LDP secretary general was seen as signal to investors that the new government will not upset markets.

The LDP-Komeito coalition has governed Japan nearly continuously since they teamed up in 1999.

But many members of the Buddhist-backed Komeito have voiced their anxiety about Takaichi who has promoted staunchly conservative policies such as visiting the Yasukuni war shrine.

Komeito members are also concerned about the LDP's recent political slush fund scandal, Komeito chief Tetsuo Saito told reporters after seeing Takaichi on Saturday.

"I told her honestly that the supporters of our party have voiced significant worries and concerns. Without easing those, there won't be a coalition administration," he said.

He also voiced his caution over moving quickly to expand the coalition without meaningful policy coordination.

"(Takaichi) has voiced her wish to expand the coalition before the parliamentary vote (to name her the next prime minister) but forming a governing coalition requires the policy unity as well as that of ideology. That's no easy task," he said.

Senior officials from the LDP and Komeito were set to meet on Tuesday.

S.Jackson--SFF