Japan will provide 85.9 billion yen (US$801.3 million) in low-interest loans to China during the fiscal year starting April 1, 2005, a drop of 11 percent year-on-year, according to a document signed by Vice Foreign Minister Wu Dawei and Japanese Ambassador to China Koreshige Anami on Tuesday.

The loans will be used in seven projects in central and western China mainly concerning water treatment and environmental and training projects.

The two officials declined to comment on the loan at the signing ceremony at the Diaoyutai State Guesthouse in Beijing.

The loans carry annual interest rates of 0.75 to 1.5 percent with a maturity of 30 to 40 years and a grace period of a decade, according to the document.

The 11 percent reduction follows cuts of about 24 percent in Japanese yen loans to China since 2000, when the amount peaked at 214.4 billion yen (US$2.0 billion).

Japan's low-interest yen loan commitment to China since 1980 totals 3.1 trillion yen (US$28.0 billion) for projects including construction of highways, airports, sewage systems and other infrastructure.

The November 2004 edition of Japanese monthly magazine Selection said that almost all economists agree that expanding Sino-Japanese trade has also contributed significantly to the recovery of the Japanese economy in recent years.

(Xinhua News Agency March 30, 2005)