TOKYO, Oct 1, 2024 (BSS/AFP) - Shigeru Ishiba was set Tuesday to become Japanese prime minister, seeking to restore the ruling party's popularity and tackle a demographic crisis, a lacklustre economy and fears over China's military build-up.

Ishiba, 67, on Friday won a tight race to head the Liberal Democratic Party (LDP), which has governed almost constantly for decades. He says he intends to call an election for October 27.

Parliament, where the LDP has a majority, was expected to appoint Ishiba on Tuesday afternoon as Japan's 65th prime minister, followed by the announcement of his cabinet.

Former chief cabinet secretary Katsunobu Kato was tipped to be finance minister, while Gen Nakatani will take defence and Takeshi Iwaya foreign affairs, local media said.

Ishiba, who has held two ministerial posts, is a self-confessed defence "geek" who tried and failed four times previously to become LDP leader.

He finally succeeded this time because while a divisive figure within the party, he is -- unlike predecessor Fumio Kishida -- relatively popular among voters, analysts said.

Ishiba's win "indicates that the LDP sought an experienced leader with broad voter appeal to steer the party in the next national election," said Yuko Nakano of the Center for Strategic and International Studies.

"If the ruling coalition secures a fresh mandate (in the election), Ishiba will have the opportunity to reshape the party's internal dynamics and restore public confidence, while addressing Japan's broader challenges, including economic stagnation felt by many voters and regional security concerns," she said.

- Tumbling stocks -

Markets have however reacted negatively, with the Nikkei plunging almost five percent on Monday. On Tuesday the index recovered some ground, up 1.6 percent late morning.

Ishiba's backing of interest rate hikes by the Bank of Japan sent the yen higher, while the prospect of corporate tax hikes has worried investors.

One major area of government spending is the military.

Kishida undertook to double defence spending and boost ties with the United States and other countries rattled by China's rise and the behaviour of Russia and North Korea.

Last week a Japanese warship sailed through the Taiwan Strait for the first time. A week earlier a Chinese aircraft carrier steamed between two Japanese islands near Taiwan.

Japan has also scrambled fighter jets on multiple occasions in recent weeks to respond to activity by Russian and Chinese aircraft, including in its airspace.

Ishiba, who visited Taiwan in August, backs the creation in the region of a military alliance along the lines of NATO with its tenet of collective defence.

"Replacing Russia with China and Ukraine with Taiwan, the absence of a collective self-defence system like NATO in Asia means that wars are likely to break out because there is no obligation for mutual defence," Ishiba said in a recent policy paper.