[TOKYO] Japan's new Prime Minister Fumio Kishida laid out plans to expand the middle classes as he seeks to bolster support ahead of a crucial national election to be held in three weeks.

In his first policy address to Parliament since taking office this week, Kishida reiterated a pledge of bold spending to help recover from the pandemic and said he'd build what he calls a "new capitalism," under which the benefits of economic growth are spread more widely.

The 64-year-old former foreign minister has just three weeks to galvanize support for his fledgling government before the Oct. 31 election that could set the tone of his term in office. His Cabinet of political veterans has been met with a tepid public response, with one poll indicating the lowest support level for an incoming premier since 2008.

While none of the opposition parties boasts support of more than single figures, they plan to cooperate in many constituencies in a bid to reduce the ruling coalition's majority. A major loss of seats could propel Kishida toward the "revolving door" that claimed six Japanese leaders between 2007-2012.

"Neoliberal policies have led to a deep divide between those who become wealthy and those who don't," Kishida said Friday. "Around the world, we are seeing a move to protect the middle classes, who are at the heart of a healthy democracy," he added, saying he'd set up a panel to come up with concrete policies.

Kishida vowed to achieve the longstanding goal of defeating deflation and said he'd press businesses to share the fruits of growth with employees and subcontractors. His plans have worried investors, who sent the Nikkei 225 Average on an eight day losing streak that ended Thursday - the longest such run since 2009.

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Kishida said a priority would be to tackle coronavirus policies and prepare for a worst scenario while the situation is calm. Cases have fallen dramatically in recent weeks, with confirmed new daily infections nationwide at 969 on Thursday, compared with more than 25,000 in mid-August.

On foreign policy, Kishida indicated continuity would be key, calling for dialogue with China, his country's biggest trading partner, while pledging to work with countries that share Japan's values to convey necessary messages to Beijing.

He also vowed to take the Japan-US alliance to new heights and cooperate with the Quad, which also includes Australia and India and is seen as balancing force against China in the region.

BLOOMBERG