TOKYO — Japanese Prime Minister (PM) Shigeru Ishiba vowed to remain in office on Monday after his ruling coalition suffered a bruising defeat in upper house elections, prompting some of his own party to deliberate his future as the opposition weighed a no-confidence motion.

The embattled premier told a news conference he would remain in office to oversee tariff talks with the United States and other pressing matters such as rising consumer prices that are straining the world’s fourth-largest economy.

Analysts say his days may be numbered, having also lost control of the more powerful lower house in elections last year and shedding votes on Sunday to opposition parties pledging to cut taxes and tighten immigration policies.

“The political situation has become fluid and could lead to a leadership change or the reshuffling of the coalition in coming months, but Prime Minister Shigeru Ishiba will likely stay to complete the tariff negotiations with the US for now,” said Oxford Economics’ lead Japan economist Norihiro Yamaguchi.

Facing a voter backlash over rising consumer prices, investors fear his administration will now be more beholden to opposition parties advocating for tax cuts and welfare spending that the world’s most indebted country can ill afford.

Markets in Japan were closed for a holiday on Monday, although the yen strengthened and Nikkei futures rose slightly, as the election results appeared to be priced in.

Yields on Japanese government bonds sold off sharply ahead of the ballot as polls showed the ruling coalition — which had been calling for fiscal restraint — was likely to lose its majority in the upper house.

Adding to the economic anxiety, Mr. Ishiba’s lack of progress in averting tariffs set to be imposed by its biggest trading partner, the United States, on Aug. 1 appears to have frustrated some voters.

“Had the ruling party resolved even one of these issues, it (its approval rate) would have gone up, but we didn’t feel anything and it seems like the US would continue to push us around,” Hideaki Matsuda, a 60-year-old company manager, said outside Tokyo’s bustling Shinjuku station on Monday morning.

Japan’s chief tariff negotiator Ryosei Akazawa departed for trade talks in Washington on Monday morning, his eighth visit in three months.

POPULIST POLITICS
Ishiba’s Liberal Democratic Party (LDP), which has ruled Japan for most of its postwar history, and coalition partner Komeito returned 47 seats, short of the 50 seats it needed to ensure a majority in the 248-seat upper chamber in an election where half the seats were up for grabs.

The leader of the main opposition Constitutional Democratic Party (CDPJ), Yoshihiko Noda, said on Sunday he is considering submitting a vote of non-confidence in the Ishiba administration as the result showed it did not have voters’ trust.

The CDPJ returned 22 seats on the ballot, finishing second.

Some senior LDP lawmakers were also quietly voicing doubts over whether Mr. Ishiba should stay, according to local media reports on Monday.

Among them was former Prime Minister Taro Aso, leader of a powerful faction within the ruling party, who said he “couldn’t accept” Mr. Ishiba staying on, Japan’s TV Asahi reported. Senior party members including Mr. Aso met on Sunday evening to discuss whether Mr. Ishiba should resign, Sankei newspaper reported.

The far-right Sanseito party clocked the biggest gains of the night, adding 14 seats to one elected previously.

Launched on YouTube during the pandemic by spreading conspiracy theories about vaccinations and a cabal of global elites, the party found wider appeal with its ‘Japanese First’ campaign and warnings about a “silent invasion” of foreigners.

Dragging once-fringe rhetoric into the mainstream, its success could mark the arrival of populist politics in Japan, which until now has failed to take root as it has in the United States and western Europe.

Sanseito’s party leader Sohei Kamiya, a former supermarket manager and English teacher, has previously pointed to Germany’s AfD and Reform UK as a possible blueprint for future success. — Reuters

HONG KONG/SHANGHAI — China’s Premier Li Qiang announced construction had begun on what will be the world’s largest hydropower dam, on the eastern rim of the Tibetan Plateau, at an estimated cost of at least $170 billion, the official Xinhua news agency said.

Commencement of the dam, China’s most ambitious hydropower project since the Three Gorges Dam on the Yangtze, was seized by Chinese markets as proof of economic stimulus, sending stock prices and bond yields higher on Monday.

Made up of five cascade hydropower stations with the capacity to produce 300 billion kilowatt-hours of electricity annually, equal to the amount of electricity consumed by Britain last year, the dam will be located in the lower reaches of the Yarlung Zangbo. A section of the river falls 2,000 meters (6,561 feet) within a span of 50 km (31 miles), offering huge hydropower potential.

India and Bangladesh have already raised concerns about its possible impact on the millions of people downstream, while NGOs warned of the risk to one of the richest and most diverse environments on the plateau.

Beijing has said the dam will help meet power demand in Tibet and the rest of China without having a major effect on downstream water supplies or the environment. Operations are expected sometime in the 2030s.

China’s CSI Construction & Engineering Index jumped as much as 4% to a seven-month high. Power Construction Corporation of China and Arcplus Group PLC surged by their 10% daily limit.

“From an investment perspective, mature hydropower projects offer bond-like dividends,” Wang Zhuo, partner of Shanghai Zhuozhu Investment Management said, while cautioning that speculative buying into related stocks would inflate valuations.

The project will drive demand for construction and building materials such as cement and civil explosives, Huatai Securities said in a note to clients.

Shares of Beijing-listed Hunan Wuxin Tunnel Intelligent Equipment Co, which sells tunnel construction equipment, surged 30%. So did shares of Geokang Technologies Co Ltd, which makes intelligent monitoring terminals.

Cement maker Xizang Tianlu Co and Tibet GaoZheng Explosive Co, producer of civil explosive materials, both jumped their maximum 10%.

BROADER IMPACT
The Chinese premier described the dam as a “project of the century” and said special emphasis “must be placed on ecological conservation to prevent environmental damage,” Xinhua said on Saturday.

Government bond yields rose across the board on Monday, with the most-traded 30-year treasury futures falling to five-week lows, as investors interpreted the news as part of China’s economic stimulus.

The project, overseen by the newly formed state-owned China Yajiang Group, marks a major boost in public investment to help bolster economic growth as current drivers show signs of faltering.

“Assuming 10 years of construction, the investment/GDP (gross domestic product) boost could reach 120 billion yuan ($16.7 billion) for a single year,” said Citi in a note. “The actual economic benefits could go beyond that.”

China has not given an estimate on the number of jobs the project could create.

The Three Gorges, which took almost two decades to complete, generated nearly a million jobs, state media reported, though it displaced at least a similar number of people.

Authorities have not indicated how many people would be displaced by the Yarlung Zangbo project.

Nongovernment organizations say the dam will irreversibly harm the Tibetan Plateau and hit millions of people downstream.

The Yarlung Zangbo becomes the Brahmaputra River as it leaves Tibet and flows south into India and finally into Bangladesh. — Reuters

CASTEL GANDOLFO, Italy  — Pope Leo XIV called for an end to the “barbarity of war” on Sunday as he spoke of his profound pain over an Israeli strike on the sole Catholic church in Gaza.

Three people died and several were injured, including the parish priest, in the strike on the Holy Family Church compound in Gaza City on Thursday. Photos show its roof has been hit close to the main cross, scorching the stone facade, and shattering windows.

Speaking after his Angelus prayer, Leo read out the names of those killed in the incident.

“I appeal to the international community to observe humanitarian law and respect the obligation to protect civilians as well as the prohibition of collective punishment, of indiscriminate use of force and forced displacement of the population,” he said. — Reuters