Japan PM in sweeping cabinet reshuffle

TOKYO (AFP) – Japan's Prime Minister Naoto Kan, who survived a bruising leadership challenge this week, named a new cabinet Friday, including a new foreign minister to handle an escalating row with China.

The shake-up in ministerial and party posts also aims to stamp Kan's authority on his year old centre-left government and effectively sidelines his vanquished rival, Ichiro Ozawa, in the ruling Democratic Party of Japan (DPJ).

Japanese Prime Minister Naoto Kan delivers a speech during his party's general meeting in Tokyo on September 17, 2010. AFP

On the economic front, where the Kan government Wednesday launched a massive currency intervention to stem the damaging rise of the yen, Kan bet on continuity and kept in place his Finance Minister Yoshihiko Noda.

"I have to create a good team," Kan told reporters before a cabinet meeting where his ministers resigned en masse.

In a sweeping change, the premier appointed new ministers in a range of portfolios -- including justice, trade, education, health, agriculture, tourism and consumer affairs.

The changes come after a turbulent first year in power following the DPJ's ouster of the conservative Liberal Democrats in a landslide election, ending their more than half a century of almost unbroken rule.

Its first premier resigned for mishandling a dispute with Washington over a controversial US airbase, political funds scandals have plagued key members, and the DPJ suffered heavy losses in July upper house elections.

Kan replaced outgoing foreign minister Katsuya Okada with former transport minister Seiji Maehara, who is considered an expert on security matters and a hawk on China and its military rise of recent years.

Maehara, a telegenic and ambitious young politician, takes over the post at a tricky time as Japan and its traditional Asian rival China are embroiled in a heated diplomatic row over the arrest of a Chinese fishing captain.

Beijing has launched a series of diplomatic protests and cancelled official visits to Tokyo over the incident, which took place last week near an East China Sea island chain that is claimed by both sides.

Maehara will also have to work with the United States, Japan's key security ally of the post-war era, to settle the details of how to build a new US airbase on Okinawa island, where many locals vehemently oppose it.

The premier's right-hand man, Chief Cabinet Secretary Yoshito Sengoku, stayed on, as did Defence Minister Toshimi Kitazawa, Financial Services Minister Shozaburo Jimi and Administrative Reform Minister Renho.

In the reshuffle of senior party posts in the DPJ, outgoing foreign minister Okada took over the powerful post of party secretary general.

Kan's rival Ozawa -- a veteran powerbroker and leading faction boss who lost in his bid to oust Kan as party president and premier on Tuesday -- has not been named to any senior posts, and neither have his allies.

Kan only offered the scandal-tainted backroom fixer the lesser post of acting president of the DPJ, which he has declined.

Prosecutors were set to question Ozawa on Saturday for a fourth time over financial reporting irregularities by his political funds management body, Kyodo News agency reported, quoting unnamed sources.

Political observers have warned there is a risk that a disgruntled Ozawa -- who has earned the nickname "the Destroyer" for his record of making and breaking alliances over the years -- may bolt from the DPJ and split the party.

The new cabinet members were due to be sworn in by Emperor Akihito in the afternoon, and ministers were then set to hold news conferences. Kan was expected to speak at a media conference at 1200 GMT.

Other news