Japan Premier Vows Economic Revival

By TAKASHI NAKAMICHI

TOKYO -- Japan Prime Minister Yukio Hatoyama vowed to press ahead with efforts to revitalize Japan's stagnant economy by jump-starting domestic consumption, even as he remained vague on how to pay for them in the face of Japan's massive public debt.

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Japanese Prime Minister Yukio Hatoyama makes his first speech to parliament at its lower house in Japan, October 26, 2009.

Speaking at his first keynote address to Japan's parliament, Mr. Hatoyama said he wanted to build an "economy for the people," offering the latest indication that the nation's new administration puts a higher priority on strengthening the economy than on easing debt.

"The Hatoyama cabinet's most important task is to put Japan's economy back on a self-sustaining recovery track driven by private-sector demand and secure sustainable growth, while paying attention to international-policy coordination," Mr. Hatoyama said.

He also reiterated plans to strengthen Japan's regional ties and to take a leading role in global efforts to curb greenhouse-gas emissions.

Mr. Hatoyama spoke on the first day of an extraordinary parliamentary session scheduled through Nov. 30. Lawmakers are expected to consider legislation that would freeze the sale of government-held shares of Japan Post Holdings Co., allow lenders to offer small companies a moratorium on loan repayments, and enable the inspection of North Korea-linked cargo ships, among other issues.

The prime minister said he wants to transform the economy into one where growth is generated more by domestic spending than by exports. To that end, the government -- now led by Mr. Hatoyama's Democratic Party of Japan -- will implement its pledged measures such as cash aid for families raising children and gasoline tax cuts, he said.

Unlike previous governments, which relied on exports and public-works projects to energize the economy, the DPJ administration will focus on helping expand industries such as medical and nursing care, education, agriculture, forestry and tourism to generate jobs, he said.

The dependence of Japan, and other Asian nations, on exports came under question last year, as the U.S.-led financial crisis spread. The International Monetary Fund warned in May that Asia's export-led growth strategy wasn't a reliable route to quick economic success.

The prime minister also sounded critical of market fundamentalism. The idea that a nation should let markets determine everything as a way to bolster growth "no longer works," he said.

Mr. Hatoyama was vague about how the new government plans to reduce Japan's ballooning public debt while spending money to support the economy, saying only that he will "consider a fiscal-rehabilitation path from the broad, long-term perspective."

Japan's debt level -- which at 170% of gross domestic product is already the highest among industrialized nations -- is on track to further expand, as the government is expected to sell more bonds to fund its spending plan.

A vocal advocate of creating what he calls an East Asian Community, Mr. Hatoyama said his administration will improve infrastructure to make Japan "an international hub for Asia," such as through the planned transformation of Haneda airport. Currently, international traffic largely goes through Narita airport, which is farther from Tokyo.

Globally, Japan will "lead international negotiations" over cuts in emissions, with its goal of reducing its greenhouse gas by 25% by 2020 from 1990 levels, he said.

Turning to national-security issues, Mr. Hatoyama said he wants to reinforce the Japan-U.S. alliance, but signaled his wish to put it on more equal footing. He also hinted that the government may not extend Japan's mission in the Indian Ocean of refueling U.S. ships backing troops fighting in Afghanistan beyond the planned January expiration.

Write to Takashi Nakamichi at takashi.nakamichi@dowjones.com