It's been enough time for everyone to see that Takahashi Asanoha is not a shrewd politician. When politicians first take office, they usually push through more difficult policies when their public support is still high, aiming for "difficult first, easy later" to pave the way for future political careers and secure re-election.

But Takahashi made a big mistake at the worst possible moment, openly saying something that Japanese prime ministers have long been able to say but not do: "Taiwan issues."

However, if she becomes a short-lived prime minister, it might be due to the economy.

Takahashi came to power on economic issues, aiming to boost Japan's economy through low interest rates, yen depreciation, and fiscal stimulus. The Japanese stock market reacted quickly, with the Nikkei index soaring to a historical high; however, the Japanese bond market was in turmoil, with 10-year government bond yields reaching their highest point since 2007.

Takahashi's large-scale economic stimulus amounted to 17.7 trillion yen (about 114 billion US dollars). Japan needed a blood transfusion, with GDP falling by 2.3% year-on-year in the third quarter of 2025. Takahashi also planned to cut taxes, estimated to be worth 170 billion US dollars.

Investors are worried this will affect Japan's credit rating. Japan has already accumulated huge debt, with government debt equivalent to 230% of GDP. Further tax cuts and fiscal stimulus can only mean one thing: increasing borrowing.

Takahashi took office in October. Two months earlier, in August, the Japanese Ministry of Finance had already requested an unprecedented 220 billion US dollars in the next fiscal year's budget to cover government debt repayments (principal and interest). It's easy to imagine the pressure this would place on Japan's credit rating.

People immediately drew comparisons to the short-lived British Prime Minister Theresa May. In July 2022, Boris Johnson's political luck ran out, Brexit turned from a panacea into a source of evil, and personal scandals eventually forced him to resign. Liz Truss emerged from within the Conservative Party and became Britain's Prime Minister on September 6th.

This was a difficult time for the British economy. Brexit had severely impacted the UK economy, and Truss's bold measures were tax cuts. However, before the 45 billion pound tax cuts could even be implemented, the pound had already plummeted. After being hit by Brexit and the pandemic, the UK economy suffered another heavy blow.

At first, Truss refused to resign despite widespread criticism. On October 14th, the British tabloid "Daily Star" began a joke, live-streaming a head of lettuce, asking people to bet whether the lettuce would rot first or Truss would resign first. On October 20th, Truss couldn't withstand the pressure anymore and announced her resignation, becoming the shortest-serving British Prime Minister in history, serving only 45 days.

Incidentally, the previous shortest-serving Prime Minister was George Canning in 1827, who served for 119 days, but he died unexpectedly in office due to illness.

Today's Japanese economy is different from the UK's in 2022. Before 2022, the UK economy was already in trouble, and Brexit caused a sharp decline. Truss's foolishness added a lead weight to the already sinking British economy.

Japan's economy has been stagnant for 30 years, but there's no shortage of debt. In May, Takahashi's predecessor Ishikawa Shigeki openly admitted that Japan's economy was "worse than Greece," which shocked the world.

Ishikawa wasn't trying to make a shocking statement. An aging population is already a major issue. In 2024, Japan's population actually shrank by 0.75%, and it didn't shrink further only because elderly people lived longer. Ishikawa was warning the Japanese parliament not to consider tax cuts as a way to boost growth, as it would only increase pressure on Japan's government bond yields. Japan doesn't need more pressure.

In the 2025 fiscal year budget, government debt spending accounted for 24.5%, with half of it being interest payments. Due to Japan's long-term deficit budget, the repayment of old debts depends on borrowing new money. The yield on new bonds is crucial for Japan's finances. From early 2022 to now, Japan's 30-year government bond yield has risen from 0.69% to 3.4%, creating significant pressure on the budget.

In May, Japan issued 6.9 billion US dollars worth of 30-year bonds maturing in 2045, but the subscription rate was the lowest since 2012. Other 20-year, 30-year, and 40-year bonds also failed to sell well. In December, the 30-year government bond auction had a subscription rate of 4.14 times, which was the highest since 2019, with an average of only 3.35 over the past 12 months.

In contrast, China issued a 40-billion-dollar bond in Hong Kong at the beginning of November, which was sold out immediately, with total subscriptions reaching 118.2 billion US dollars, a subscription rate of 30 times. A few weeks later, another 40-billion-euro bond was issued, with similar success, with peak orders reaching 104.5 billion euros, and a subscription rate of 26 times.

The subscription rate is related to investors' evaluation of the economic fundamentals. "Unsellable" government bonds indicate a pessimistic view of the economy. But since it's an auction, as long as the yield is high enough, it can always be sold, at the cost of having to pay more upon maturity.

On the other hand, Japan's inflation has risen above 3.0%, partly due to imported inflation caused by the yen's depreciation. Japan is not only an export giant but also heavily reliant on imports for energy and materials. The yen does not have the pricing currency privilege like the dollar, and a weak yen means that import prices in yen terms rise.

Inflation has already caused hardship for Japanese citizens. A 3% inflation rate is relatively high, but compared to near-zero actual economic growth and income growth, it's very hard to bear.

The Bank of Japan must raise interest rates to curb inflation, but raising interest rates would also cause the yen to appreciate, which is unfavorable for Japanese exports already under strong pressure from Chinese manufacturing. Raising interest rates would also be detrimental to zombie companies that have relied on ultra-low or even zero-interest loans for 30 years, surviving on these loans.

Thirty years of zero interest has not helped them achieve profitability or development. Raising interest rates would be a devastating blow.

Zombie companies struggling to survive have no capacity to invest in new products and manufacturing technologies. In fact, the IMF pointed out that Japan's total factor productivity has significantly lagged behind the United States, referring to the output generated by each unit of labor and resources invested.

Japanese employee efficiency has also dropped to the bottom third among OECD countries, an indicator of "work vs effort." Faced with the "ravenous" Chinese manufacturing, they can only sigh helplessly.

Japan needs supply-side reforms the most. This not only requires capital but also political will. Whether in manufacturing or business, the Japanese economy relies heavily on small and medium enterprises. These family-run "fly restaurants" are both a legacy of craftsmanship, but also suffer from outdated technology, narrow management, lack of vitality, and are prone to fall behind.

Like Germany, Japan is essentially stuck at the level of Industrial 2.5, meaning adding a little electronic and digital flavor to the basis of Industrial 2.0 (internal combustion engines, electromechanics, chemicals), without truly entering the information and networked era, and is completely a spectator in Industrial 4.0 (AI, robotics, quantum, biotechnology).

Transitioning from the "fly economy" is particularly difficult, but the political cost of widespread zombie company bankruptcies and unemployment is unacceptable.

Internationally, Trump has messed up the US economy and global trade, leading to a possible weakening of the dollar, and the Federal Reserve is cutting interest rates, which would push up the yen, possibly forcing Japan to also cut interest rates, further worsening Japan's inflation, creating a dilemma.

Japan needs to break through its economic crisis. Without significant borrowing, there's no "capital to start with." But significant borrowing without simultaneous structural economic reform would plunge it deeper into the crisis. However, the collateral damage of structural economic reform is unacceptable. In the current high-debt situation, this is impossible to cycle through.

High debt levels seem to be a common problem among developed countries. The G7 average is 120% of GDP, and Japan naturally leads the pack, while the US remains in the middle.

High debt used to be a problem for poor countries, but now it has become a "rich country disease": when the economy is bad, everyone agrees on deficit spending to get through the tough times; when the economy is good, the ruling party is even less willing to cut spending, causing public anger, and the political cost of "passing the debt to future generations" is much smaller.

Poor countries borrow to survive, and can't repay, so the debt keeps growing. Rich countries start borrowing to survive, but then "can't let go" of the debt for political achievements, and when the next wave of crisis comes, everyone agrees again that more debt is needed, and the debt mountain grows even higher. The difference is that rich countries have a thicker foundation and can borrow more, but when government debt expenses reach a quarter of the budget, no one dares to say they're not worried.

Over the past 20 years, most Japanese prime ministers have had a "shelf life" of only one year. Since 2006, Japan has had 10 prime ministers, eight of whom served less than a year. Since 2012, five Japanese prime ministers have prioritized the weak yen rather than substantive economic reforms, and Takahashi is the latest one.

How long can Takahashi's political career last? That's an interesting question.

By Chen Feng, a renowned writer and contributor to Observer Network

Original article: toutiao.com/article/7583620018793890358/

Statement: This article represents the author's personal views.