Prime Minister Shinzo Abe pledged Friday in his first Diet policy speech that the government will step up structural reforms, promote technological innovation to foster growth in the economy, and instill a nationalist mind-set.

Abe, 52, the youngest prime minister in postwar history, also said in his 30-minute speech that the government plans to study how it can participate in collective defense, currently considered prohibited under the Constitution, and nurture trust with China and South Korea, and closer ties with the U.S.

“I will continue to carry the torch of reform without holding back, with the belief that our future will be open to us,” Abe told the House of Representatives on the first day of the 81-day extraordinary Diet session.

“The kind of country I am aiming for is a beautiful country that is full of energy, opportunities and kindness, one that cares a great deal about independent spirit, and one that is open to the world.”

He said that his “beautiful Japan” was a country stressing the importance of its culture, tradition, natural environment and history.

To sustain Japan’s economy with the decreasing population, innovation and an openness to the rest of the world is necessary, he continued.

He pledged that his government will craft a long-term strategy, called Innovation 25, to support innovative industries that will become a driving force for the world’s second-largest economy.

The government will cultivate areas that are likely to grow in the next two decades, including energy, medicine and information technology, he said.

After running a campaign for the Liberal Democratic Party presidency that was criticized for being too vague, Abe finally gave numerical targets to some of his proposals.

He said the government would double the number of people working from home using high-speed Internet infrastructure. He also promised to double the amount of investment from overseas by 2010, more than double the number of international conventions in Japan within the next five years, and boost the annual value of exports of farm and marine products to 1 trillion yen by 2013 from about 330 billion yen last year.

Abe said his government will continue the structural and fiscal reforms initiated by his predecessor, Junichiro Koizumi. The new prime minister said the government would promote economic growth to increase tax revenue to ease the implementation of fiscal reform.

On hiking the consumption tax, an issue economists say is inevitable, Abe only said the government will not solve Japan’s mountainous fiscal deficit just by hiking the tax. He implied that tax hikes might be coming, saying that if the nation no longer has a stable source of budget revenue, it will have to look elsewhere for one.

He said he will address the mounting debt by continuing with the previous government’s cuts in public service spending.

The cuts, many of which were outlined by Koizumi, include reducing the number of public servants by more than 19,000 in the next five years, halving the ratio of government assets to the gross domestic products by 2015, and shifting many public services to the private sector.

The cuts will give Japan a smaller, more efficient “muscular government,” Abe said.

On the diplomatic front, Abe said the country will express its opinions on the global stage. At home, politicians — not bureaucrats — will take the initiative in diplomatic and national security strategies.

Abe said China and South Korea, which Japan is trying to get its first summit meetings with in nearly a year amid strained relations, have very close ties in a number of areas, including economic.

On educational reforms, a pillar in his LDP leadership campaign, Abe vowed to make changes to the public school system to promote children’s academic abilities and morals, make teaching license renewals mandatory, and introduce school evaluations.

Another pillar, the “second chance” program, was also mentioned. The government will introduce measures to give people who have failed in their careers second chances in starting another business and job-hunting. He promised to reduce the number of people who don’t have full-time jobs by 20 percent by 2010.

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Gist of Diet policy speech

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