TOKYO, Sept 8 (Reuters) - Japan should strive for a new form of capitalism to reduce income disparity that has worsened under the coronavirus pandemic, says former foreign minister Fumio Kishida who hopes to become leader of the ruling party and next prime minister. Kishida is the only Liberal Democratic Party (LDP) member to announce his candidacy in a leadership vote on Sept. 29, after Prime Minister Yoshihide Suga last Friday said he would step down. The winner of the vote is all but assured to be Japan"s next prime minister. Popular COVID-19 vaccination minister Taro Kono and former internal minister Sanae Takaichi have signalled their ambition to run. Takaichi, 60, is expected to announce her candidacy later on Wednesday and if successful would become Japan"s first female leader. Kishida said the neo-liberalism and deregulation that Japan has embraced during the reform era of former prime minister Junichiro Koizumi in the early 2000s have widened the gap between the haves and have-nots in the society. "Without distribution of wealth there won"t be a rise in consumption and demand...there won"t be further growth if distribution of wealth is lost," Kishida said at a presentation of his economic proposals in Tokyo on Wednesday. Kishida repeated a call for an economic stimulus package worth "tens of trillions of yen" to combat the coronavirus pandemic. He said he would use fiscal spending for achieving economic stability while not giving up on fiscal consolidation. He said the Bank of Japan should maintain its 2% inflation target as "it is a global standard" and changing it would send a wrong message to markets, and would leave the sales tax untouched for the time being. Kishida also called for setting up a 10 trillion yen ($90.7 billion) university fund to stimulate science and promotion of renewable energy, while retaining nuclear power technology, which he said should be considered as a clean energy option. TAKAICHI TO JOIN RACE Takaichi has the backing of former prime minister Shinzo Abe, local media said, and would base her challenge on policies to fend off China"s technology threat and help strengthen an economy battered by the coronavirus pandemic. Takaichi became the first female internal affairs minister in the second Abe administration in 2014. But even as local media have said influential Abe has thrown his support behind Takaichi helping her obtain the 20 lawmaker backers needed to run in the leadership election, she has ranked poorly in popularity ratings, which could hamper her chances. Grass-roots LDP members will vote in the leadership election along with the party"s members of parliament, and whoever wins will lead the party to the lower house election that must be held by Nov. 28, making public appeal an important factor in choosing the new leader. Takaichi has said she wanted to work on issues left unresolved by previous administrations, such as achieving 2% inflation, and introducing legislation "that prevents the leakage of sensitive information to China". She said an extra budget needed to be compiled as soon as possible to bolster Japan"s medical system, which is under strain because of the pandemic. A member of the party"s most conservative wing, she often visits the Yasukuni Shrine, a memorial to Japan"s war dead. Such visits by Japanese leaders infuriate old wartime foes such as China and South Korea. She has also opposed allowing married couples to keep separate surnames, to the disappointment of promoters of women"s rights. Takaichi is due to speak at 4 p.m. local time (7:00 GMT). ($1 = 110.2500 yen)