Japan reviews aid to new global No. 2 China

TOKYO, (AFP) -Japan is reviewing whether to cut its financial aid to China after the population giant overtook the island-nation as the world’s number two economy last year, officials said Wednesday.

Foreign Minister Seiji Maehara has asked his staff to report by June on whether to reduce overseas development assis

Japan’s ODA -- including grant aid and technical cooperation -- for China was worth 5.4 billion yen (66 million dollars) in fiscal 2008, the last year for which data is available, Japanese media reports said.

The two Asian giants next year mark the 40th anniversary of the normalisation of diplomatic ties and say they are aiming to deepen what they call a “mutually beneficial relationship based on common strategic interests”.

In this context, “it is important to formulate a new configuration of cooperation between Japan and China,” said foreign ministry assistant press secretary Takeshi Matsunaga in comments emailed to AFP.

“On the future ODA to China, it is our intention to review the assistance, in the light of the development of China as well as the current situation surrounding ODA, and taking into consideration... bilateral relations as a whole and the purpose of respective cooperation.”

Media reports said opinion was divided in Japan on continuing the aid.

Some officials believe providing cash to China is no longer necessary since China outranks Japan in economic output, Kyodo News reported, quoting unnamed government sources involved in the debate.

Others “fear a possible negative impact from severing such aid as it has helped improve anti-Japanese sentiment among Chinese people and facilitate an environment in which Japanese firms can do business in China”, it said.

Some also note, Kyodo said, that there is still room for Japan to exercise influence through aid to China, citing the growing gap between the rich and poor and people’s concern over environmental destruction.

The review comes months after Japan and China went through their worst diplomatic row in years, triggered by maritime collisions between a Chinese fishing trawler and Japanese coastguard ships in disputed waters.