Japan Abe taps allies for cabinet, pledges deflation fight

Wed Dec 26, 2012 9:00am EST
 

By Linda Sieg and Leika Kihara

TOKYO (Reuters) - New Japanese Prime Minister Shinzo Abe vowed on Wednesday to battle deflation and a strong yen, and bolster ties with the United States as he kicked off a second administration committed to reviving the economy while coping with a rising China.

A hawk on security matters, Abe, 58, has promised aggressive monetary easing by the Bank of Japan and big fiscal spending by the debt-laden government to slay deflation and weaken the yen to make Japanese exports more competitive.

Critics worry, however, that he will pay too little heed to reforms needed to generate growth despite an ageing, shrinking population and reform a creaking social welfare system.

The grandson of a former prime minister, Abe has staged a stunning comeback five years after abruptly resigning as premier in the wake of a one-year term troubled partly by scandals in his cabinet and public outrage over lost pension records.

"With the strength of my entire cabinet, I will implement bold monetary policy, flexible fiscal policy and a growth strategy that encourages private investment, and with these three policy pillars, achieve results," Abe told a news conference after parliament voted him in as Japan's seventh prime minister in six years.

Abe's long-dominant Liberal Democratic Party (LDP) surged back to power in this month's election, three years after a crushing defeat at the hands of the novice Democratic Party of Japan.

CLOSE ALLIES, PARTY RIVALS

Abe appointed a cabinet of close allies who share his conservative views in key posts, but leavened the line-up with LDP rivals to provide ballast and fend off criticism of cronyism that dogged his first administration.   Continued...

 
Japan's new Prime Minister Shinzo Abe attends a news conference at his official residence in Tokyo December 26, 2012. REUTERS/Toru Hanai