Japan to terminate aid to China

March 3rd, 2005  

Topic: Japan to terminate aid to China


Source: Yahoo News

TOKYO, (AFP) - Japan plans to terminate its main form of aid to China by 2008 when Beijing is to host the Olympic Games (news - web sites) given its neighbour's growing economic and military power, a report said

Tokyo will gradually reduce the amount of low-interest yen loans, which account for some 90 percent of Japanese aid to China, and phase them out completely by the 2008 Olympics, the Yomiuri Shimbun said, quoting government sources.

Since 1980, Japan's yen loans to China have exceeded three trillion yen (29 billion dollars) for projects including the building of highways, airports, sewage systems and other infrastructure.

However, as China has rapidly emerged as an economic and military power Japan has concluded that Beijing will no longer need the cheap loans and would put more resources into Africa, the report said.

A Japanese foreign ministry official declined to confirm the report but said that Tokyo and Beijing were in talks over "the future" of Japan's yen loans to China.

Apart from the yen loans, Japan is also considering cutting grant aid gradually, the report said.

Grants and technical assistance accounted for some 10 percent of Japan's total aid to China in the year to March 2004.

Calls for ending Japanese aid to China have become more vocal among Japanese lawmakers against a backdrop of cooling bilateral relations as the two countries lock horns over their war-time past and scarce energy resources.

China was the biggest recipient of Japanese foreign aid 1999-2002 but has since been outpaced by other countries including Indonesia and India.

Japan issued a protest in November after a Chinese nuclear submarine violated its territorial waters near disputed gas fields, setting off a two-day naval pursuit.

China, in turn, has been angered by Prime Minister Junichiro Koizumi's repeated pilgrimages to a Tokyo shrine that honors Japan's World War II dead, including those convicted for war crimes committed during Japan's occupation of China.