After a stunning election, Japan will be unleashed. Or is it already too late?

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Tobias Harris is the founder and principal of Japan Foresight LLC and the author of The Iconoclast: Shinzo Abe and the New Japan.

Just how resounding was the recent election victory by Japan’s Liberal Democratic Party (LDP)? It won so many seats in its parliament, the Diet, that it had to give up 14 of them.

The Diet’s Lower House has two categories of seats: one for individual constituencies, like in Canada’s House of Commons, and another set to reflect proportional representation. Candidates can run for both. But the LDP won so many constituency seats that the party ran out of available candidates to fill its significant allotment of proportional-representation seats.

In the end, the LDP still took 316 seats, a supermajority in the Lower House, and the largest majority that the party – which has held power in Japan for all but four years in its 71-year history – has ever commanded. It is a stunning reversal for the LDP, which entered the election without a majority in either House, while facing a more united opposition front.

Much of the credit lies with the LDP Leader of just five months, Sanae Takaichi. Confident that her personal popularity could pull up a party that had lost the trust of the Japanese people and had gone through four leaders in six years, the Prime Minister gambled on a snap election, going against the wishes of many in her party. But the LDP also benefited from an opposition miscalculation: the Constitutional Democratic Party’s January alliance agreement with the Buddhist-affiliated party Komeito, the LDP’s long-time junior coalition partner until their divorce last year, wound up alienating the CDP’s own supporters.

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Now, the opposition’s power has been marginalized, the Prime Minister’s doubters within the LDP have been silenced, and the public is overwhelmingly behind her. Ms. Takaichi may be in as strong a position as a Japanese prime minister has ever been.

The question now: Is all that political capital enough for her to transform the ailing country?

Ever since she ran for the LDP leadership for the first time in 2021, Ms. Takaichi has made little secret of her great ambitions for Japan. They are born out of fears about its future: that it is running out of time to ensure its security and prosperity in the 21st century, that the threat from its three nuclear-armed neighbours grows by the day; that Japan’s industrial might has eroded, particularly in the vital high-tech sector; and that it is too dependent on other countries, not only for the critical minerals needed for advanced manufacturing, but for basic commodities like food and energy. The undercurrent of her vision, then, is one that resonates in Canada, too, after Prime Minister Mark Carney’s Davos speech: Japan can no longer assume the persistence of a rules-based international order that will ensure its access to what it needs to survive – and so it must increase its strategic autonomy and economic self-reliance.

This will demand an extensive range of policies. Her ambitious plans include strengthening Japan’s intelligence capabilities; updating its core national security documents, which will likely include a plan for raising defence spending beyond the NATO requirement of 2 per cent of GDP; reviewing Japan’s three non-nuclear principles to potentially enable the U.S. to deploy nuclear weapons in the country; and bolstering investment screening and efforts to counter foreign influence. Perhaps most importantly, her government’s new growth strategy could entail a huge increase in public spending on priority industrial sectors as Japan seeks to encourage private industry to invest more at home.

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Ms. Takaichi may face fewer constraints than any prime minister who has come before her, including her mentor, the late Shinzo Abe. But fewer restrictions does not mean no restrictions. Her government still does not control the Diet’s Upper House, which will give the opposition a platform for delaying her priorities, even if her Lower House supermajority enables her to overrule it if necessary. Finance ministry officials, meanwhile, will highlight the risks of a surge of new spending.

But the biggest constraints may be Japan’s broader economic and social trends. Its ¥1.3-quadrillion debt load – giving it the highest government debt-to-GDP ratio among developed economies, according to the International Monetary Fund – is seriously worrying. And it is running out of ways to pay it off, due to its aging, shrinking population that continues to strain public resources and limit the ability of employers to find enough workers. This has exacerbated tensions between corporate Japan – which has supported bringing in more foreign workers – and much of the public, which increasingly resents the social impact of the surge in foreigners.

And what might matter most of all is the growing role of foreign investors in the market, who are watching the government’s actions warily and could pull out at any time. It is little surprise that Ms. Takaichi has repeatedly sought to reassure markets that she is committed to “responsible” fiscal expansion. But as recent interest-rate spikes and yen sell-offs suggest, she may have little margin for error.

Finally, like other U.S. allies, Japan has to navigate complicated relationships with the United States and China. While Donald Trump and Xi Jinping have demonstrated to the Japanese people that reducing dependence on both is needed, doing so is virtually impossible in the near term. China’s use of economic coercion after Ms. Takaichi discussed Japan’s possible involvement in a Taiwan conflict in December showed how intertwined the Chinese and Japanese economies remain. At the same time, Japan still needs U.S. support for regional deterrence, though the price of keeping the Trump administration committed has grown, both in terms of defence-spending promises and in U.S.-Japanese trade. The Japanese government has already promised to invest US$550-billion in U.S. industrial projects to avoid higher tariffs and broader trade friction.

Japan’s willingness to appease Mr. Trump also does not preclude Washington from signing a deal with China to reduce American commitments to regional security, or from focusing its attentions elsewhere.

In the end, the biggest danger to Ms. Takaichi may be time. The changes she envisions could take years before their effects are apparent, and the costs – which could include higher inflation, higher interest rates, or worsening labour shortages – would be felt by the Japanese people immediately. In the meantime, decisions made in Washington or Beijing will continue to reinforce the reality of Japan’s continuing strategic dependence.

Ms. Takaichi has earned her historic mandate. But there is a real danger that she is too late to achieve the strategic revolution she desires.