After five years at the helm of the world's No. 2 economy, Japanese Prime Minister Junichiro Koizumi steps down leaving a dramatically different landscape to the one he inherited.
The 64-year-old reform-minded maverick, with his stubborn determination to overcome resistance to change, set out to slash public works spending and clean up banks' bad debts to revitalize the flagging economy.
Japan's economy is now on course to register its longest sustained post-war recovery. Deflation finally appears to be beaten, and the shopping malls are thronging as domestic demand picks up.
While Japan's revival owes much to the booming Chinese economy, there is little doubt that Koizumi left his mark, most notably by pushing through privatization of the national post office with its huge savings bank.
Koizumi even gambled his leadership at snap elections to crush opposition to his pet project to break up the financial mammoth, a symbol of the country's often-corrupt politics.
For years the US$3 trillion that the mail operator sits atop in savings and life insurance policies provided a vast pool of funds to bankroll frequently wasteful but politically popular public works projects.
A third-generation politician, Koizumi sought to reorganize the factional structure of the ruling Liberal Democratic Party (LDP).
Koizumi has also pressed government ministries to rein in spending to tackle Japan's public debt -- now equivalent to over 160 percent of national economic output after a series of multi-billion dollar fiscal stimulus packages.
Some elements of his policy were introduced under former prime minister Ryutaro Hashimoto, but even so economists credit Koizumi for pushing ahead with them.
At the same time, however, there are question marks about whether his successor, widely expected to be Chief Cabinet Secretary Shinzo Abe, will have the same appetite, or scope, for reform.
Unlike rival candidate, Finance Minister Sadakazu Tanigaki, who has proposed raising the sales tax to 10 percent from the current five percent, Abe has shown little desire to tinker with the politically sensitive levy.
Whoever takes over also faces challenges from an aging population, declining birthrate and widening social inequalities, not to mention sour relations with Asian neighbors including China, a major trading partner.
"Abe is widely expected to follow the fiscal and economic reforms pursued by Koizumi, but the bigger question may be whether the current environment is conducive to such policies," said Barclays Capital economist James Barber.
"The reforms passed by Koizumi are being widely blamed for creating economic and social disparities in Japan," he added.
Social inequalities may still be less pronounced in Japan than many other countries but there is increasing public concern about the emergence of the "haves" and the "have-nots" -- and the rising number of Japanese millionaires.
One, Livedoor Co founder Takafumi Horie, was even courted by Koizumi to run for parliament last year as a torch-bearer for reform, but failed to win a seat and is now on trial on charges of fraud at his once high-flying Internet firm.
Morgan Stanley's chief economist for Japan, Robert Feldman, believes that Abe's philosophy is quite similar to that of Koizumi.
"Investors can be cautiously optimistic that Koizumi's reform policies will continue, and that bureaucratic guerrilla resistance will fail," he said.
It remains unclear, however, whether relations with China would improve if Abe takes over the premiership.
"Abe appeals for a separation of economic and political issues with China. It remains unclear whether China will accept Abe's appeal," Feldman said.
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
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RULES BROKEN: The MAC warned Chinese not to say anything that would be harmful to the autonomous status of Taiwan or undermine its sovereignty A Chinese couple accused of disrupting a pro-democracy event in Taipei organized by Hong Kong residents has been deported, the National Immigration Agency said in a statement yesterday afternoon. A Chinese man, surnamed Yao (姚), and his wife were escorted by immigration officials to Taiwan Taoyuan International Airport, where they boarded a flight to China before noon yesterday, the agency said. The agency said that it had annulled the couple’s entry permits, citing alleged contraventions of the Regulations Governing the Approval of Entry of People of the Mainland Area into the Taiwan Area (大陸地區人民進入台灣地區許可辦法). The couple applied to visit a family member in
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