Japan is letting the strain of its diplomatic relations with China spill over into the nations' economic ties.

Japan's Chief Cabinet Secretary Shinzo Abe declared on Thursday that his country would "put off making a decision on yen loans for this fiscal year to China ... because of various situations surrounding Sino-Japanese relations."

Abe did not elaborate what the situations are. The bilateral relationship is at its lowest ebb after Japanese Prime Minister Junichiro Koizumi was insistent on paying homage to the Yasukuni Shrine.

The justification Abe gave for the delay, if not suspension, is clear evidence of one thing: Japan is ready to put its economic ties with China under the sway of political upheaval.

Japan announced last year that it was reducing aid to China from 2008. This time Abe offered an explicit link between the yen aid and politics.

Japan's official development assistance (ODA) to China began in 1979 and has totaled more than US$25.7 billion.

The multiplicity of the money from the island neighbor has greatly helped drive China's growth. The ODA from Japan has funded large-scale infrastructure projects in China ranging from roads, airports and power stations.

But the aid has also benefited the donor itself, economically, politically and diplomatically.

A speech given by Japanese Foreign Minister Taro Aso at the National Press Club in Tokyo on January 19 confirmed the point.

"It must not be forgotten that in the end, ODA is implemented for Japan's own sake," Aso said.

He quoted a Japanese saying that goes, "sympathy is not merely for others' sake," or in other words, "your kindness will be rewarded in the end."

Obviously Aso was attempting to solicit domestic support for continuing the ODA program, adding that it is the type of endeavor that should be considered with a broad and long-term perspective.

Aso reminded his audience that Japan implements ODA for its own benefit in the end.

He recommended that Japan's ODA be used abundantly in the future for the objectives of enhancing and expanding ties between Japan and countries with the same interests and aspirations.

These, in Aso's eyes, are the objectives of building a type of policy coalition or encouraging the stability of other countries on which Japan's prosperity is built.

Since 1995, Japanese ODA has reflected another dimension of the interdependence of the two countries that underscores elements of concern rather than cordiality.

Japanese ODA has been re-targeted to address such areas as environmental problems. This stems from Japanese worries about acid rain and dust blown in from the continent.

The yen loans to China have been in decline, with the Sino-Japanese relations afflicted with tension as a result.

The Japanese loans under the ODA to China fell to 85.9 billion yen (US$728 million) in 2004 from 214.4 billion yen (US$1.19 billion) in 2000, a 60 percent reduction. China ranks third among recipients of Japan's ODA.

Japan has long used its economic capabilities as a principal instrument in conducting foreign policy.

Ostensibly, Japan's ODA involves the separation of economics from politics. But as it has been used to promote Japanese business interests, it can be seen to have advanced the country's interests as a whole, especially in the context of a country that was the first to advance the concept of "comprehensive security."

The economies of China and Japan have helped each other since they normalized the diplomatic relations in 1972. China has turned out to be a natural partner for Japan, a country poor in resources but superior in high technology.

China has emerged as Japan's biggest trade partner, with the two clinching a record high trade volume of US$189.3 billion last year. Japan was the third-largest to China after the European Union and the United States.

Paralleling this has been a corresponding rise in Japanese foreign direct investment. By the late 1990s, China trailed only the US as a destination for Japanese investment.

The economic interdependence between China and Japan is of positive value to their relationship as a whole.

Japan is adding a new knot to its rocky relations with China.

(China Daily March 27, 2006)