October 7, 2015 / 12:45 AM / in 2 years

Japan's Abe keeps allies in key posts as attention returns to economy

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe retained close allies in key posts in a cabinet reshuffle on Wednesday, playing it safe as he pivots back to the economy after enacting divisive security legislation that dented his popularity.

Japan's Prime Minister Shinzo Abe (C) stands with Japan's Deputy Prime Minister and Finance Minister Taro Aso (R) and Japan's Economics Minister Akira Amari before a photo session at his official residence in Tokyo, Japan, October 7, 2015. REUTERS/Yuya Shino

In a symbol of that promised refocus, Abe picked Katsunobu Kato, a deputy chief cabinet secretary, for a new post in charge of a fresh goal to build a “Society in Which All 100 Million People Can be Active”.

Kato is tasked with coordinating policies to try to raise the low fertility rate, reform the creaking social security system and boost growth, targets central to a platform Abe hopes will woo voters ahead of an upper house election next July.

The new slogan, Abe aides say, is meant to show that all Japanese will be included in economic growth. Some critics, though, have said it echoes wartime propaganda.

The new portfolio also takes over promoting a more active role by women in society, one of Abe’s pet policies. The number of women in the cabinet, however, dropped to three from five.

“This cabinet aims to tackle challenges for the future - to put the brakes on the aging of the population to keep the population from falling below 100 million and create a society where anyone - old and young, women and men, and those suffering from incurable diseases and the handicapped - can take one more step forward,” Abe told a news conference.

Abe added that he had instructed Kato to set up a new policy body to craft a first round of steps by the end of the year.

Nine of the 19 cabinet members kept their portfolios, including Chief Cabinet Secretary Yoshihide Suga, Finance Minister Taro Aso, Economics Minister Akira Amari, Defense Minister Gen Nakatani and Foreign Minister Fumio Kishida.

Abe’s attempt to boost his ratings with a broad cabinet make-over, including five women, backfired in September 2014 when two ministers quickly resigned over scandals.

This time, he opted for stability at the core, but leavened the line-up with 10 new appointees. Among them was maverick lawmaker Taro Kono, a frequent government critic, who was appointed minister for administrative reform, a position similar to that he held in Abe’s Liberal Democratic Party (LDP).

Hiroshi Hase, a former teacher and professional wrestler, replaced Hakubun Shimomura as education minister.

Shimomura had said he would stand down over missteps that forced the scrapping of plans for a new national stadium as the centerpiece of the Tokyo 2020 Olympics.

Koichi Hagiuda, an LDP aide to Abe, replaces Kato as a deputy chief cabinet secretary. Hagiuda, 48, has caused headaches for Abe’s government with outspoken comments on Japan’s wartime past, a topic that often frays ties with China.

Veteran lawmaker Motoo Hayashi, 68, assumed the trade and industry portfolio.

Abe has been trying to demonstrate renewed commitment to fixing the stale economy with three new policy “arrows” that aides say subsume an original trio of hyper-easy monetary policy, public spending and structural reform.

Those targets are boosting the fertility rate so Japan can keep its population from falling below 100 million from about 126 million now, eliminating the need to quit work to care for elderly relatives, and growing the economy by one-fifth to 600 trillion yen ($5 trillion) - a goal skeptics doubt can be hit.

The Bank of Japan (BOJ) refrained from expanding stimulus earlier on Wednesday, even as slumping exports and falling oil prices threaten its projection that the economy is on track to hit its 2 percent inflation target next year.

Fears of recession will keep the BOJ under pressure to ease when it meets again on Oct. 30.

Additional reporting by Kiyoshi Takenaka and Tetsushi Kajimoto; Editing by Paul Tait and Nick Macfie

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