Japan PM Takaichi may call early election, coalition partner says

By Leika Kihara

TOKYO, Jan 11 (Reuters) - Japanese Prime Minister Sanae Takaichi may call an early general election, the head of her party's coalition partner said on Sunday, after media reported she was considering a February vote.

It would be the first time for the conservative Takaichi, Japan's first female prime minister and a fan of Britain's Margaret Thatcher, to face the voters, giving her a chance to capitalise on the strong public approval ratings she has enjoyed since taking office in October.

Her tough stance on China has appealed to right-wing voters but has sparked a major diplomatic dispute with Japan's powerful Asian neighbour.

Hirofumi Yoshimura, leader of the Japan Innovation Party, known as Ishin, told public broadcaster NHK he had met with Takaichi on Friday and felt her view on the timing of an election had shifted to a "new stage".

ELECTION WOULD COMPLICATE TAKAICHI'S SPENDING PLANS

"I wouldn't be surprised if she made the decision as reported by the media," Yoshimura said. The Yomiuri newspaper reported on Friday, citing government sources, that Takaichi was considering holding a snap election on February 8 or 15.

Yoshimura said he and Takaichi did not discuss the specific timing of any election.

Takaichi was mum on when she would call an election during an interview with NHK recorded on Thursday and aired on Sunday.

Takaichi, an advocate of big spending to boost Asia's second-biggest economy, said she had just instructed her cabinet ministers to ensure the timely execution of the supplementary budget for the fiscal year through March and parliamentary approval of next fiscal year's budget.

"At present, I am focusing on the immediate challenge of ensuring that the public feels the benefits of our stimulus policies aimed at cushioning the blow of inflation," she said.

But Tetsuo Saito, head of the opposition Komeito, said a February election "would make it impossible to pass the budget by the fiscal year-end, at a time Japan's economy faces a critical phase," telling NHK he was surprised by the reports that Takaichi was considering dissolving parliament when it convenes on January 23.

Takaichi's $783 billion spending proposal, her first budget as prime minister, includes her flagship spending programme. The yen fell against the dollar on Friday after the Yomiuri report on her election plans.

Japan's economy has weathered the hit from higher U.S. tariffs, but stubborn food inflation has weighed on consumption.

If Takaichi cannot enact the budget by the end of March, her government would have to compile a stop-gap budget, which could delay execution of spending measures.

ECONOMIC RISK FROM CHINA DISPUTE

Japan's Internal Affairs Ministry issued a statement on Saturday urging regional election committees to start preparing in case of an early election. While the ministry said it was just responding to media reports, political analyst Shigenobu Tamura said the statement meant the election was a "done deal".

Yoshihiko Noda, a former prime minister and head of the largest opposition group, the Constitutional Democratic Party of Japan, said he had expected Takaichi to pass the budget before calling an election but now felt she would dissolve parliament on January 23.

Another economic risk for Japan is its trade tension with China, which could deal a blow to its export-reliant economy if Beijing imposes curbs on vital rare earths.

Takaichi touched off the dispute in November by saying a Chinese attack on democratically governed Taiwan could be deemed an existential threat to Japan, which could trigger a military response from Tokyo. China regards Taiwan as part of its territory, a claim the island's government rejects.

Since then, China has urged its citizens not to travel to Japan, cancelled meetings and events, and banned exports of dual-use items for Japan's military, among other measures.

Takaichi told NHK that Chinese export curbs targeting Japan alone were against international protocols and unacceptable. Japan is negotiating with China through diplomatic channels, while working with its Group of Seven partners to build supply chains that reduce reliance on "a particular country", she said.

Japan's next lower house election does not need to be held until October 2028. A strong win in an early election would enhance Takaichi's grip on the coalition. Her Liberal Democratic Party and Ishin hold a narrow majority in the lower house but are in a minority in the upper house.

Takaichi became prime minister by winning the LDP presidency after her predecessor, Shigeru Ishiba, oversaw a string of electoral losses. She was approved by parliament but has not run in a national election.