Japan will shut off official development assistance (ODA) to China in the near future, Japanese Prime Minister Junichiro Koizumi hinted on November 28 while attending the summit between the Association of Southeast Asian Nations (ASEAN) and China, Japan and the Republic of Korea (ROK) held in Vientiane, Laos. 

He was echoed by Foreign Minister Nobutaka Machimura, who told the Japanese Parliament on November 26 that "it is only appropriate for China to graduate from ODA in the near future."

Against the backdrop of uncertain bilateral relations in recent years, Japan's such act seems to bear great significance. Looking back at the history of the aid program, however, we can find that a rational approach is necessary in weighing the Japanese decision to end its ODA to China in the near future. No politically-charged feelings should be allowed in evaluating the program.

Japan's ODA program, which formally began in 1961, is an important part of its international profile. Backed up by post-World War II assistance from the United States, Japan quickly stepped out of the economic ruins and developed into a major economic power. The ODA program, while earmarking aid for underdeveloped countries and regions, has helped Japan repair its damaged image in the international community.

On the other hand, the program served Japan's national economic strategy, displaying various features during different periods of time.

In the 1950s, Japan wanted to expand its exports and ensure Japanese enterprises could expand their overseas market shares through its overseas aid program, according to Jin Xide, a researcher at the Institute of Japanese Studies of the Chinese Academy of Social Sciences. Government aid was, therefore, invested in infrastructure construction in the recipient countries, which were asked, as a condition of the program, to purchase from Japanese enterprises.

In the wake of the 1973 oil crisis, Japan increased its government aid to the Middle East, Africa, Central and South America to secure energy supply sources. In the early 1980s, when the Cold War was at its peak, "strategic assistance" became a factor in Japan's foreign aid program, which leaned toward political considerations, said Jin.

In China's case, Japan decided to provide aid to the country in the late 1970s. It was a result of the improvement of Sino-Japanese relations. In September 1972, the two sides normalized their relations. In August 1978, they signed a peace and friendship treaty. Bilateral trade began to recover and gradually grow from that point.

Meanwhile, Japan had its strategic concern in awarding China government aid.

Japan's economic power, which was only second to the United States, played the most important role in fulfilling the government's ambition of improving Japan's international standing. Faced with economic disputes with Washington at that time as well as uncertain relations with the former Soviet Union, Japan found an improving relationship with China was in its interests, said experts on Japanese studies.

They said the aid program might also have been an implicit expression of Japan's historical penitence towards its military invasion of China.

Japan's ODA for China comprises three parts: long-term yen loans, free grants and technical assistance. The bulk of the program's funds are yen loans.

These yen loans were poured into China's infrastructure construction, such as ports, to facilitate the country's Japan-bound energy exports. It also helped Japan diversify its energy import sources.

China and Japan signed a long-term trade treaty in 1978, which agreed China would export some coal and oil to Japan, which in turn sold equipment and technology to China. Beijing agreed that from 1978 to 1982, it would export 7 million, 7 million, 8 million, 9.5 million and 15 million tons of oil to Japan respectively, according to the Shanghai-based China Business News.

From 1979 to April 2004, Japan extended 2.95 trillion yen (US$28.9 billion) in government loans to China, according to statistics from the Chinese Ministry of Foreign Affairs. The fund has played an important role in helping China develop its economy, especially in the initial years when China's economy began to take off.

As its economy slowed and stagnated in recent years, Japan has gradually cut its ODA funding. In the 1990s, Japan was the world's top ODA donor, but in 2001, Japan lost this position due to its financial difficulties, giving way to the United States. Last year, Japan's ODA was US$8.9 billion, about 60 per cent that of the US.

Japan's ODA to China was halved from 200 billion yen (US$1.96 billion) in 1999 to 100 billion (US$98 million) in 2003. This year, it was cut by nearly 60 per cent compared with that three years ago.

China's economy is expanding rapidly and steadily while Japan is yet to pull out of the stagnation that has troubled it for more than a decade. Against this backdrop, it was not unexpected that Japan would end its ODA program for China - sooner or later. The Chinese people are grateful for the help their neighbor has offered, but now the country has become fully capable of mainly depending on itself for further development.

In planning to stop the ODA program to China, Japan certainly has its own strategic considerations and the Chinese people understand this. But it should not point fingers at China for the halting of ODA.

Sadly, the ODA issue is being exploited by some Japanese officials, media and right-wing forces to express their anti-China feelings.

They blamed China's military power, claiming it menaces Japan. They ignore the fact that China is solely concerned with defending itself.

They cited the ODA's failure to win the Chinese people's trust and promote favorable feelings towards Japan. They ignore the fact that it is the repeated visits by their government officials, including Prime Minister Junichiro Koizumi, to the Yasukuni Shrine, where Class-A war criminals are honored, that has eroded the trust and good feelings that Asian countries, including China, may have towards Japan.

It is important to look at the issue in its real economic context. Political clamoring will not contribute to a correct understanding of the program. Worse still, it may risk undermining the friendship ODA helped to promote in the past few decades.

(China Daily December 6, 2004)