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2 October 2012

Japan’s Next Leader Faces One of World’s Toughest Jobs

Yoshihiko Noda will doubtless win his party’s leadership race this week.

There’s little certainty, though, that Japan’s prime minister is up to putting his country, the world’s No. 3 economy, on stronger footing. Noda, 55, and his party must also contend with a new political force: Osaka Mayor Toru Hashimoto, 43, who is forging a popular new third-party movement. Whoever takes control as 2013 approaches, Noda and the DPJ or the LDP, faces a daunting set of challenges. Here are the three biggest.

First, get a grip on territorial disputes. Anti-Japan demonstrations sweeping China are endangering a trade relationship that tripled in the past decade to more than $340 billion, as well as the stability of markets, Japan’s credit rating and its global standing. China, it must be said, has been too tolerant of the increasingly violent protests over disputed islands. This week, the official vehicle of U.S. Ambassador Gary Locke was damaged as it entered embassy grounds.

Embroiled in its own leadership transition, China seems keen on fanning the flames of nationalism to deflect attention from embarrassments such as the corruption scandals surrounding Bo Xilai. The next leader of Japan must extend an olive branch before the crisis escalates into armed conflict -- not because it’s all Japan’s fault, but because China is unlikely to do so.

Second, revive the economy. Noda, or the LDP’s to-be-named- later pick for prime minister, must find his inner Koizumi. Prime minister from 2001 to 2006, Junichiro Koizumi was the closest thing Japan has had in decades to an economic reformer. He reduced wasteful public-works spending, put deregulation on the table and privatized the vast postal system, which ran the world’s biggest savings bank.

Still, history shows Koizumi was more of a Mikhail Gorbachev than a Margaret Thatcher or Ronald Reagan: a leader who set the stage for a genuine economic reformer. Japan’s next leader must be that change agent.