New Japan PM launches cabinet

The choice of Kan, 63, as Japan's fifth premier in three years, has bolstered his Democratic Party's chances in an upper house election it needs to win to break free of a tiny partner and avoid having to find more allies to pass bills easily.

The Democrats will stay in power regardless of the outcome of the upper house poll, expected in July, but a revamped coalition could complicate policymaking, depending on its composition.

Coming off a six-month stint as finance minister, Kan appears committed to reining in a public debt that is already twice the size of the economy. His cabinet also seems united on the topic, except for banking minister Shizuka Kamei, who heads a tiny coalition party and likes big spending.

"Restoring our fiscal health is indispensable for economic growth," Kan told a news conference, adding that just raising taxes would spur deflation and that it was necessary to prioritise spending on growth areas. He also urged a non-partisan debate on fiscal and tax reform.

Kan, who takes over after indecisive predecessor Yukio Hatoyama squandered sky-high support during just eight months in office, gave the finance portfolio to fellow fiscal conservative Yoshihiko Noda.

He also appointed like-minded former national strategy minister Yoshito Sengoku as chief cabinet secretary -- the top government spokesman and an important policy coordinator.

"Kan has called for the need for fiscal reform, so that's the direction the new government will head in. But the question is how much they can actually deliver," said Takeshi Minami, chief economist at Norinchukin Research Institute.

The next general election must be held by late 2013, and while the Democrats have pledged not to raise the 5 percent sales tax before then, party fiscal reformers want to state clearly their intention to do so before that vote takes place; Kazinform cites China Daily.

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