Shigeru Ishiba was appointed Japan's new prime minister Tuesday, pledging to revitalize the sluggish economy, tackle the nation's demographic challenges, and spearhead the creation of an "Asian NATO" to counter China.

Ishiba, 67, says he intends to call a general election on Oct. 27. He won a tight race Friday to lead the Liberal Democratic Party (LDP), which has governed almost continuously for decades.

After the LDP-dominated parliament approved Ishiba's appointment, his new cabinet of 19 ministers was announced. Just two were women, who have historically been poorly represented in politics and business in Japan.

Foreign minister Yoko Kamikawa, one of five women in the outgoing cabinet, was replaced by Takeshi Iwaya. Katsunobu Kato, who was health minister during the COVID pandemic, was named finance minister, while Gen Nakatani took defense.

Ishiba, who has held at least three previous ministerial posts, tried and failed four times before to become LDP leader.

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

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.

Markets, however, have reacted negatively to his selection, with the Nikkei plunging almost 5% on Monday. On Tuesday, the index recovered some ground, closing up 1.9%.

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

The military, meanwhile, is expected to be an area of focus for self-professed defense "geek" Ishiba.

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

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

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