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Japan's prime minister wins party vote, gets to keep job

From Kyung Lah, CNN
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Japan PM holds onto power
STORY HIGHLIGHTS
  • Naoto Kan defeated a political heavyweight to keep his job
  • The revolving door at the top job has meant a lack of clear policy for Japan
  • The country is racked with deflation, surging currency and an exploding elderly population
  • Kan must now convince voters that the party can move beyond infighting and get things done

Tokyo, Japan (CNN) -- Japanese Prime Minister Naoto Kan on Tuesday defeated political heavyweight Ichiro Ozawa to keep his job.

Kan won enough votes to continue leading the ruling Democratic Party of Japan, or DPJ. The majority party leader typically is the prime minister.

"My entire political life has been spent working towards this moment," Kan said in a speech before the party voting started.

The revolving door at the top job in Tokyo has meant a lack of clear policy for the world's third-largest economy, racked with deflation, a surging currency and an exploding elderly population.

Video: Japan PM favors fiscal restraint
RELATED TOPICS
  • Naoto Kan
  • Ichiro Ozawa

Ozawa challenged Kan for the party's leadership role just three months into the job. Ozawa said that Kan was ineffective and lacked determination, and that he was unable to wrest power from the government's powerful bureaucrats.

National poll after poll showed Kan was the public's preferred choice as the nation's leader, however. Opinion polls showed 65 percent to 70 percent of the voters favored Kan; support for Ozawa lingered in the teens. But DPJ members, not the public, got to vote for the party's leader.

Kan must now convince voters that the party can move beyond political infighting and get things done.

Now is a critical time for Japan, economically and socially, Kan said in a speech before the party vote. But he did not offer specifics about how to tackle problems.

Ozawa, in his speech before the party vote, said he had heard the public's criticism, and he promised to put his entire life into the job of prime minister.

"I have a dream. I want Japan to be energetic once again. I want to hand the baton to the next generation, even if I am exhausted," said Ozawa, who has been a political operative in Japan for four decades.

On the economy, he had proposed a 2-trillion-yen ($24 billion) stimulus plan, more than twice that of Kan's proposal.

Kan favors reining in Japan's debt, the developed world's largest. More stimulus spending will eventually lead to a crisis similar to the one experienced in Greece, he says.

The yen is at a 15-year high, adding to the difficulties for Japan's economic recovery. A strong yen raises the prices of Japanese exports and cuts the profits of Japanese companies that make products abroad.

The financial markets are waiting to see whether the skyrocketing yen will lead to government intervention. Japan hasn't taken such steps since 2004.

But Benjamin Pedley, head of investment strategy in North Asia for HSBC Private Bank, doubts that government intervention would have any long-term effect on the strength of the yen. Trading partners in Europe and North America, on balance, would prefer a stronger yen.

"The problem is, any intervention would be unilateral. They won't have any cooperation," Pedley said.

CNN's Kevin Voigt contributed to this report.