The ODA consists of both free assistance and loans.

Starting from 1980, Japan began to provide China with the ODA which has become an important component in the Sino-Japanese relationship and economic cooperation between the two countries.

Such aids have also signalled a good-neighbourly and friendly relationship between the two countries.

Among its assistance to China, Japan mainly supplies China with loans, while free assistance holds a comparatively smaller proportion.

By the end of 2000, Japan had provided China with nearly US$50 billion of loans in various forms, accounting for 41.91 percent of the total aid that China has received from foreign countries.

China has ever since taken advantage of Japan's ODA to build a number of large-scale, technology-intensive infrastructure projects in energy exploitation, transportation, urban construction, water conservation and environmental protection.

These ODA aids have made an active contribution to China's cultivation of professionals, technological progress, the improvement of management level, as well as people's living conditions.

More important, Japanese ODA has also stimulated the flow of its direct non-governmental investment into China.

By the end of September 2000, the value of Japan's direct investment in China amounted to US$26.93 billion, ranking second behind the United States.

Propelled by both the Japanese governmental and non-governmental funds and investment, China's domestic enterprises have introduced many sophisticated industrial technologies from Japan, improving their technological levels and stimulating the upgrade of the country's manufacturing industries.

Undeniably, Japan's ODA has played an important role in stimulating the upgrade of China's industrial structure and technological levels.

Aided by Japan's ODA, China has dramatically strengthened its infrastructure construction, improved its investment environment, and elevated industrial technological levels, thus promoting Sino-Japanese bilateral economic and trade development.

Since Japan implemented its ODA to China, Sino-Japanese bilateral trade has achieved a remarkable advancement.

Its value grew by nearly 10 times from US$8.9 billion in 1980 to US$87.78 billion last year.

Since 1993, Japan has become China's largest trade partner, while China has become Japan's second largest trade partner and one of its important export markets.

Japan's ODA has undoubtedly played an active role in contributing to China's economic development and the two countries' appreciable economic cooperation.

However, Japan has changed its ODA strategy since the end of the Cold War.

With changes emerging in international situations since the 1990s, some Japanese forces have thrown doubt over the goal of peace and friendship established between China and Japan since normalization of their bilateral relationship.

They have built up a cautious attitude towards China as China's rapid economic growth outshone Japan's economy, which suffered a long-standing slowdown over the past decade.

The "China threat" theory has become very popular among some Japanese rightist forces.

Under pressure from these forces, Japan has made a significant adjustment to its foreign strategy and ODA policy towards China.

The largest change is that Japan's attempt to restrain China with the leverage of the ODA has been dramatically strengthened.

For example, Japan followed Western political and economic sanctions against China by halting its ODA to the nation in 1989 when political turbulence broke out in China.

The changes in Japanese domestic politics have also influenced Sino-Japanese relations, leading to various controversies between the two countries over almost all fields.

Their controversies over such issues as the Taiwan question, the ownership of the Diaoyu Islands, maritime resources exploration, the issue of history, as well as the Japan-US military alliance, have led to increased frictions in bilateral relations.

These disagreements have influence Japan's ODA policy to China to some extent.

The Chinese Government has consistently appreciated Japan's ODA and its role in China's domestic economic construction, and also worked hard for the smooth implementation of the ODA.

It is the duty of both China and Japan to eliminate their mutual misunderstandings caused by the two countries' economic friction.

Regrettably, the Japanese Government has already linked its ODA with China's nuclear tests and national defence construction, laying down various preconditions for its ODA to China.

In March 2002, Japan further decided to gradually reduce its ODA to China, and carry out an annual review over its ODA policy towards China.

A key reason for Japan's ODA reduction lies with its worry about the rapid economic and political rise of China than its excuse of Japan's economic and fiscal difficulties.

In essence, Japan's ODA to China has always been a touchstone and barometer of Sino-Japanese strategic relations.

Since the 1990s, the Japanese Government has never given up attempts to make use of ODA to exert an influence on China.

The change in Japan's ODA policy will not only reflect its change in foreign strategy and the policy towards China, but will also produce an important influence on future Sino-Japanese ties and international relations in Asia-Pacific region.

The author is an associate researcher with the Strategy Institution under the Party School of the Central Committee of the Communist Party of China.

(China Daily December 6, 2002)