Bloomberg News

Jojima Named Finance Chief as Noda Sets Pre-Election Cabinet

October 01, 2012

Koriki Jojima, a Cabinet novice, was named Japan’s fifth finance minister in three years, highlighting revolving-door appointments that may hamper efforts to revive an economy mired in deflation.

Prime Minister Yoshihiko Noda named 10 new ministers today ahead of an election that may come by the end of the year. Makiko Tanaka, a proponent of improving ties with China amid heightened tensions between Asia’s two biggest economies, was made education minister while Seiji Maehara was named minister of national strategy and economy.

“I am making these changes to strengthen the cabinet and enable us to tackle the many issues that face the economy,” Noda said at a televised press conference in Tokyo. The appointments came less than two weeks after he won a leadership vote to remain head of the ruling Democratic Party of Japan.

Jojima and Noda must convince new opposition leader Shinzo Abe to help pass legislation to fund this year’s budget, without which the government will run out of money by the end of November. Almost twice as many voters back Abe’s Liberal Democratic Party over the DPJ ahead of elections Noda has pledged to hold “soon” and must call by August.

“It’ll be a short-lived cabinet so the role of the finance minister will be limited,” said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. and a former central bank official. “Jojima is not so experienced, so the bureaucrats will play a bigger role in formulating ministry policy.”

Jojima’s Challenges

Jojima, 65, is a graduate of the University of Tokyo and former head of the worker’s union at food company Ajinomoto Co. (2802) He was first elected to parliament in 1996 and is a founding member of the DPJ. While he has served as the party’s parliamentary affairs chief, this is his first cabinet post.

As head of currency policy, he must cope with a stalling recovery and a yen within four percent of its postwar high, hurting exporters such as Toyota (7203) Motor Corp. Predecessor Jun Azumi oversaw the sale of a record 8 trillion yen ($103 billion) in market intervention last October after the currency hit a postwar high of 75.35 yen per dollar. The yen was at 77.87 at 2:53 p.m. in Tokyo.

“Jojima isn’t much known in financial markets, but he was probably picked because of his bargaining ability with opposition parties,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo. “He will inherit policies that Noda’s administration and the finance ministry have set.”

China Dispute

The yen has strengthened 0.5 percent after the Bank of Japan unexpectedly added monetary stimulus and expanded its asset purchase programs two weeks ago. The strong currency threatens the profits and sales of exporters including Toyota and Panasonic Corp. (6752)

Exports fell 5.8 percent in August from a year earlier, the third straight decline, underlining slumping demand for Japanese-made cars, machinery and other manufactured goods. JPMorgan Securities, Credit Suisse Group AG and BNP Paribas expect the economy to contract this quarter after growth slowed to a 0.7 percent annual pace in the previous three months.

Tanaka, 68, is the daughter of the late Prime Minister Kakuei Tanaka, who established diplomatic ties with China in 1972. Japan and China are mired in a territorial dispute over islands in the East China Sea claimed by both that has sent relations to their lowest level since at least 2005.

Tanaka, a former LDP lawmaker who served as foreign minister a decade ago, was among the members of the Japan-China Friendship Association who last week visited Beijing and held talks with Politburo member Jia Qinglin.

‘Modern Relationship’

“She is the daughter of the person who really founded the modern relationship between Japan and China,” said Katsuhiko Nakamura, director of research at the Asian Forum Japan in Tokyo. “She accompanied her father on several trips there, and her connections are a factor in her appointment.”

Maehara takes over as head of fiscal and economic strategy, replacing Motohisa Furukawa. He stepped down as foreign minister five days before the March 11, 2011 earthquake and nuclear disaster over allegations he violated campaign financing laws, and also served as transportation minister, overseeing the successful turnaround plan for Japan Airlines Co.

As DPJ policy chief, Maehara in August said it would be “desirable” for the government and the Bank of Japan to reach a deal allowing the bank to purchase foreign securities to help stimulate the economy. BOJ Governor Masaaki Shirakawa has opposed the idea, which would require the bank to identify and manage appropriate foreign assets.

Maehara “is fairly aggressive on monetary easing,” said Hiromichi Shirakawa, chief economist in Tokyo at Credit Suisse Group AG.

Okada Retained

Noda retained Katsuya Okada as deputy prime minister, Koichiro Gemba as foreign minister, Yukio Edano as trade minister, Satoshi Morimoto as defense minister and Osamu Fujimura as chief cabinet secretary.

Public support for the LDP has risen since Abe, a former prime minister, was elected its head last week. In a Nikkei newspaper poll published Sept. 28, 37 percent of respondents said they support the LDP, up 12 percentage points from August. Support for Noda’s DPJ fell two percentage points to 19 percent. Asked who they favored as the next prime minister, 41 percent of respondents picked Abe, while 28 percent picked Noda.

To contact the reporters on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net; Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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