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Home >> Opinion
UPDATED: 16:28, June 08, 2006
Why Japan unfreezes aid loans to China?
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On June 6, Japanese Chief Cabinet Secretary Shinzo Abe announced that the Japanese government had decided to provide China with a low-interest loan of 74 billion yen (approximately $US0.659 billion) in the 2005/2006 financial year. The annual loan amount was declared two months later than in previous years.

To find out more, CCTV conducted a telephone interview with Hu Jiping, Deputy Director of the Institute of Japanese Studies at the China Institute of Contemporary International Relations and asked him to analyze the matter.

(CCTV): In what way should we look at the Japanese aid loan to China? What benefits can it bring to Japan and China?

(Mr. Hu): The loan is mutually beneficial. On the one hand, the money offered by the Japanese government plays a positive role in the opening and reforming of China. On the other hand, the Official Development Assistance (ODA) offered by the Japanese government will promote its economic relationship with China. Besides, the money is a low-interest loan so Japan are guaranteed a stable income from the interest. If the Japanese government offered such a large loan to its' domestic enterprises, it would get almost no return on its investment as Japan's interest rate is incredibly low, almost zero in fact. In the 1980s, the Japanese government created investment opportunities for Japanese companies by assisting the Chinese government in building infrastructure, thereby helping a large number of Japanese corporations to invest here. So we can see that the ODA is a win-win act rather than unilateral charity.

(CCTV): Why did Japan unfreeze the loan to China in this particular period?

(Mr Hu): Japan wants to ease the tension with China. In March, the Japanese government decided to temporarily freeze its aid loan to China. However, Japan could not freeze its assistance forever but had to wait for the right opportunity to restore it. Last month, talks between the Foreign Ministers of the two countries signaled that tensions between China and Japan had eased. This signal was the one that Japan had been waiting for to unfreeze the loan.

(CCTV): We can see that the Japanese aid loans to China are decreasing from year to year. Why?

(Mr Hu): As a matter of fact, the loans did not decrease in the 1990s. The amount began reducing in 2001 and this trend continued in 2002 and 2003. The main reason for this is that in the opinion of some Japanese, China's economy is growing too fast. Furthermore, they are concerned that China is becoming awfully powerful and believe this tendency should be curbed. To some extent, the trend reflects that many Japanese believe in "the China threat". Nowadays, it is reasonable for China to receive loans from Japan as GDP per capita in China has not yet reached $US3000. It is likely however that that Japan will continue to decrease the loan amounts and may stop the offer altogether in 2008.

(CCTV): Japan is offering more and more assistance to India, African countries, Pacific Island countries and others. Could you analyze Japan's intentions?

(Mr Hu): By offering India assistance, Japan hopes to get support from them in helping to contain China. By providing assistance to African and Pacific Island countries it aims to get more approval votes for a position on the UN Security Council.

(CCTV): How do you view signs that the tension between China and Japan is easing?

(Mr Hu): The Japanese government has to ease tensions with its neighboring countries. First of all, obviously, it is not in Japan's national interest to have bad relationships with its neighbors. Secondly, there is a lot of pressure on the government from Japanese civilians to improve relationships with its neighboring countries. Up to 80 per cent of Japanese want the government to maintain a good relationship with China, Korea and other neighboring countries. In short, no matter what Japanese political party comes to power, no matter who becomes Prime Minister, the country must maintain good relationships with its neighbors and should not depend solely on the US.

By People's Daily Online

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