By Jason Douglas and Junko Fukutome

TOKYO -- Japanese Prime Minister Sanae Takaichi's blowout election victory gives her an unprecedented shot at shaking Japan out of its long economic funk and taking on a bigger security role deterring Chinese ambitions in Asia.

Her agenda includes new investment in strategic industries, temporary tax relief for inflation-weary consumers and fatter defense budgets.

For the U.S., Takaichi's triumph ensures Japan is led by a prime minister who is in broad agreement with American goals, especially President Trump's imperative of getting allies to spend more on regional security.

"We will confirm the unshakable unity between Japan and the U.S., while advancing broad Japan-U.S. cooperation in diplomacy, economics, and security," Takaichi said at a news conference Monday.

Her message to fellow lawmakers is, "This is Japan's last roll of the dice. We are going to have to go big on economic growth, on economic security. We've just got to do it," said William Chou, deputy director of the Japan Chair at the Hudson Institute, a conservative Washington, D.C.-based think tank.

But even though she now leads a parliamentary juggernaut with the biggest majority of any Japanese leader in history, Takaichi still faces challenges.

Investors have been jittery about the prospect of more government borrowing to finance her spending plans. That could lead to higher interest rates and a weaker currency in future, analysts say, though financial markets broadly welcomed the prospect of long-term, stable leadership in Japan on Monday, with stocks hitting new records, the currency strengthening and bond yields generally stable.

Another big challenge is Beijing. Japan has suffered a barrage of economic reprisals from China after Takaichi said Japan might get pulled into any conflict over Taiwan, a self-ruled island democracy Beijing claims as its own territory. It isn't clear if or when those tensions will ebb.

And analysts say that Takaichi will need to deliver for voters who, having handed her such a big win, will have little patience with her government if it fails to measure up.

"I do think that the landslide puts pressure on Takaichi to deliver results. There can be no excuses like in the past few years, where leaders could blame opposition parties for stalling," said Rintaro Nishimura, senior associate in Tokyo at the Asia Group, a strategic advisory firm.

In the Japanese parliament's lower-house election Sunday, Takaichi's ruling coalition won 354 of the 465 seats up for grabs. The gains included a more than two-thirds majority for her Liberal Democratic Party alone, which won 316 seats, its best-ever result.

That substantial margin of victory gives Takaichi's administration overwhelming control over Japan's legislature. The LDP and its smaller coalition partner, the Japan Innovation Party, can now claim a majority of slots on key committees that scrutinize legislation as well as the power to appoint those panels' chairs. They can also overrule parliament's upper house if the two chambers clash on legislation.

One legislative goal now within easy reach is dismantling restrictions on exports by Japan's defense industry. Current rules limit exports to nonlethal uses, such as rescue missions, transportation and minesweeping. Supporters say ditching those restrictions would drive investment and innovation in the sector by allowing Japanese firms to find new markets and customers, which would help Japan play a much bigger role in regional security by arming neighbors such as Australia and the Philippines.

Takaichi's huge majority might also tempt her to pour her political capital into conservative causes, some analysts say, such as revising Japan's pacifist postwar constitution to recognize Japan's Self-Defense Forces as a fully fledged military. The constitution says Japan will never maintain land, sea or air forces, so the JSDF operates in a legal gray area. Such a change would ultimately require approval in a referendum and could face stiff opposition from other political parties and sections of the public.

Relations with China show little sign of improving. Beijing has canceled tourist flights to Japan and squeezed Japanese companies' access to critical minerals in retaliation for Takaichi's Taiwan comments. Though she has said she won't retract her remarks, her new mandate could give her added confidence in dealing with Beijing and might even give her the political space to try to ease tensions from a position of strength.

"I think for Ms. Takaichi, it's wise to appear tough publicly while being a bit more flexible behind the scenes where appropriate," said Tomoko Ako, an expert on Chinese politics at the University of Tokyo.

Takaichi's overarching priority is the economy, however. Her immediate economic priorities include a temporary cut to a consumption tax on food to give households some relief from rising prices. A longer-term goal is making Japan's economy more secure by weaning it off Chinese-centered supply chains for essential materials such as critical minerals, and honing Japan's technological edge. Her government has identified 17 sectors it wants to target for strategic investment, including critical minerals but also precision machinery, biotechnology and quantum computing.

The size of her majority should give her the ammunition to see off any internal opposition to her economic plans in the LDP, while also giving her the cover to make unpopular decisions, which could include raising taxes to finance spending promises if revenues disappoint.

Write to Jason Douglas at jason.douglas@wsj.com and Junko Fukutome at junko.fukutome@wsj.com

(END) Dow Jones Newswires

February 09, 2026 05:20 ET (10:20 GMT)

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