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China, Japan in Yen Talks
China is talking with Japan on which projects are to receive yen loans in 2001.
The two sides are expected to reach preliminary agreements in the first half of next year and to sign formal contracts by the year's end, according to the Ministry of Finance (MOF).
China and Japan have agreed that beginning in 2001 the two sides will work on which projects are to be funded by yen loans once a year, instead of every five years.
How many yen loans China receives each year will depend on which projects are chosen that year.
Making the decisions annually instead of every five years is expected to have little influence on the volume and use of yen loans, said Yu Zhensheng, deputy director of the Finance Department of the MOF.
"If any changes do happen to the amount and application of yen loans, they have nothing to do with the change in the decision-making way from doing it every five years to annually," Yu told China Daily in an exclusive interview.
He said annual decisions are expected to enable China to make better use of the yen loans. China will be able to timely propose projects that are key to its current economic development and which are in urgent need of capital.
Nobuyuki Sugimoto, economic affairs minister with the Embassy of Japan, said making the decisions annually will allow Japan to take into account its financial situation when deciding on how much yen loans to give to China in that year.
He told Business Weekly that Japan has organized a talkfest of about 15 academia, officials, business leaders and economists to work out its official development aid (ODA) policies for China in the 21st century before the end of this year. Yen loans are an integral part of Japan's ODA for China, which also includes free aid and technological co-operations.
China's stable development is crucial to the peace and development of Asia, and is also in Japan's interest, said Sugimoto. He said Japan will continue to offer financial aid to China's economic development.
Japan has committed four batches of 2,605.9 billion yen (US$24.3 billion) loans to China since 1979. The loans were made every five years, in line with China's sixth to ninth five-year plans respectively.
Official statistics show Japan accounts for about one-half the foreign aid that China receives.
The aid is mainly used on infrastructure construction, such as transportation, energy, airports, railways, ports, power stations and water-pollution control.
Agricultural and environmental protection projects, such as irrigation works and afforestation have also been added to the list in recent years, according to the MOF.
Both Chinese and Japanese officials expressed their satisfaction over the use of the yen loans.
Yu Zhensheng said the yen loans have done a great deal in helping the implementation of China's sixth to ninth five-year plans. "The yen loans helped improve China's investment environment and the Chinese people's living standard," he said.
The low-interest loans have helped shore up China's capital shortage in the construction of key projects. Annual interest rates of the yen loans are as low as 0.75 to 2.2 per cent, with terms of up to 40 years.
Yu said the Chinese Government values the yen loans and has expressed many times its thanks to the Japanese Government and the Japanese people for their support to China's economic development.
He told China Daily that China highly appreciates the Japanese Government's constant expression that they will continue to support China's reform, opening-up and economic construction and that their ODA policies for China will not change.
China is still a developing country and is in urgent need of capital for many of its projects. Yu said China hopes the yen loans will play an active part in China's strategy of developing its backward west.
He added that China has also noticed some different opinions on the yen loans in Japan. It is reported that some Japanese try to persuade their government to reduce financial aids to China.
Yu said that the different opinions in Japan may have come from dissidents' lack of full-scale understanding of the economic situation and the use of yen loans in China and promised to make efforts to strengthen understanding between China and Japan. (Source: chinadaily.com.cn)
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