An elderly resident casts her vote into a balloting box installed in a fixed route bus offering early voting to residents of a remote mountain district in Atami, Shizuoka Prefecture, on July 11. Main voting, and counting, in the House of Councillors election will be on Sunday. Prime Minister Shinzo Abe's Liberal Democrats expect a big upper house victory. Photo: AFP / The Yomiuri Shimbun

Investors sure haven’t made a great deal of money betting against Japan’s Shinzo Abe.

The prime minister’s return to power in 2012 seemed shock enough. His first stint, from 2006 to 2007, was as inept as they come. His improbable resurrection five years later confounded the naysayers. And now he’s knocking on posterity’s door: in November, Abe will become Japan’s longest-serving leader.

First of course, his Liberal Democratic Party needs to triumph in Sunday’s upper house election. But you won’t find a political observer in Japan who doubts “Teflon Abe” will win a landslide. Neither recession risks nor myriad scandals nor a Donald Trump bromance gone awry has seriously shaken Abe’s power base.

Abe’s survival owes much to opposition parties in disarray. Young voters, meantime, like his efforts to give Japan a louder voice in world affairs, particularly as China’s influence surges. Yet as Abe wonders what his legacy will be, a sense of lament must be setting in.

Topping Tarō Katsura ’s record-long premiership in the early 20th century ensures Abe a prime place in the history books. But his failure, and the failure of his vaunted “Abenomics,” to achieve his mandate to remake Japan’s economy and raise living standards is quite another story.

That’s why Abe’s post-election agenda may be his most important yet. US President Trump’s trade war has already ended Japan’s longest expansion since the 1980s. While Trump’s tariffs were aimed at China, the fallout hit Japan hard. Gross domestic product may have contracted in the second quarter. In May alone, GDP may have shrunk 0.4%, according to the Japan Center for Economic Research.

Wages, the metric Abe hoped would buttress his reputation as a reformer, are flagging. They fell for the fifth straight month in May, a reminder that executives aren’t sharing hefty corporate profits with workers. The virtuous cycle Abe hoped to unleash in 2012, in other words, isn’t happening.

What’s more, the Trumpian headwinds zooming Asia’s way are hitting Japan’s exports, which fell for a sixth straight month in May. Japan’s overseas shipments to China, its biggest customer, plunged a whopping 9.7% in May. That’s slamming corporate sentiment, undermining investment and making it even less likely Japan Inc. will fatten paychecks.

Abe’s best option is implementing the bold structural upgrades he’s been promising since 2012. In reality, instead, he bet it all on aggressive Bank of Japan easing, with an assist from construction ahead of the 2020 Olympics. The resulting 30% drop in the yen boosted exports, profits and the Nikkei Stock Average. In 2013 alone, the Nikkei rallied 57%.

The glaring absence of bold structural reforms is now a liability as the trade war impedes global growth. China, for example, grew just 6.2% in the second quarter, its slowest pace in 27 years. That may refocus Abe on micro-economic upgrades to keep the improved macro story on track. Here are five post-election priorities.

One: a ruthless Cabinet reshuffle. Abe has put a few modest reform wins on the scoreboard, not least of which are tighter corporate governance and steps to import more foreign labor to offset a shrinking workforce. But there’s a gulf between the promised deregulatory “Big Bang” and the modest tweaks achieved, and it washes up on Taro Aso’s lap. It’s high time Abe replaced Finance Minister Aso. Nor have Abe’s other top economy ministers Toshimitsu Motegi and Hiroshige Sekō proved themselves up to the task of reflating Asia’s No. 2 economy. Time to bring in some new blood.

Two: catalyze a startup boom. One of the biggest mistakes Tokyo made these last 20 years is targeting the top end of the corporate food chain. The BOJ’s zero-rate policy is all about curbing the yen exchange rate to the advantage of Toyota, Mitsui and Sony. Abe should target 20-something innovators angling to disrupt a rigid economic system and create new jobs. Shifting tax incentives toward entrepreneurs and cutting red tape would increase Japan’s share of tech unicorns and boost competitiveness.

Three: get serious about gender equality. Sunday’s contest is notable in one respect: a record 28% of candidates are women. A solid female win rate could raise Japan’s dismal global standing. Though Abe talks of making Japan’s other half “shine,” its women-in-parliament ranking fell to 164thfrom 122nd on his watch. It’s worth noting, too, that only 15% of women running are in Abe’s LDP, while 45% are in the opposition Constitutional Democratic Party of Japan. Economists routinely cite gender inequality as a major growth killer. It’s time Abe got serious about “womenomics.”

Four: put out the welcome mat. Abe’s pledge to alter Tokyo’s demographic trajectory has his party stepping out of its comfort zone to accept more foreign labor. New visa regulations took effect on April 1 to address the labor crunch. But they lack audacity and imagination. The 345,000 foreign workers Japan hopes to welcome by 2023 won’t plug staffing holes as quickly as the holes appear. In 2018, Japan’s 126 million people produced just 920,000 babies. For many foreign workers, Tokyo is limiting stays and declining to allow immediate family members to join them. Abe must use his new mandate to open Japan.

Five: generate an energy revolution. The LDP’s obsession with nuclear power is becoming a headwind all its own. For Japan, no industry holds greater promise than devising and commercializing ways for China, India and Indonesia to avoid choking on rapid growth. Japan is ideally positioned to profit from a renewables boom – if only Abe’s government were open to a Plan B. The LDP is beholden to the powerful nuclear lobby, which has clout similar to America’s military-industrial complex. It’s time Abe unleashed Japan’s energy potential.

The risk is that Abe will double down on efforts to revise Japan’s pacifist Constitution, a nod to the LDP’s right-wing supporters angling to allow Japan to field a conventional military. But this distracts from economic retooling. His unilateral move to tighten controls on semiconductor material exports to South Korea was downright Trumpian. This, too, is a distraction that won’t raise Japan’s competitive game.

In today’s world, the clout Abe craves comes from economic strength. Nothing would restore Tokyo to its past glory faster than creating a Silicon Valley East and vibrant markets. Sunday’s election is Abe’s chance to achieve a destiny that is his – and Japan’s – for the taking.

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