New yen loans to China are put on hold for now

by Reiji Yoshida

Amid continued strained bilateral ties, the government has put on hold its decision to provide fresh yen loans to China for fiscal 2005, Foreign Ministry officials said Thursday.

The government traditionally approves the fiscal year’s new yen-loan projects for China in March, the last month of the fiscal year, but will put the decision on hold, the officials said.

The move appears to be an attempt to put pressure on Beijing to resolve the strained relationship between the two countries, observers said.

Senior Vice Foreign Minister Yasuhisa Shiozaki reportedly announced the ministry’s position to a foreign affairs policy meeting of the ruling Liberal Democratic Party earlier in the day.

Yuji Miyamoto, new ambassador to China, spoke of the suspension during an interview Thursday with The Japan Times.

“A decision (on new yen-loan projects) will be made after various factors, including assessments by diplomatic authorities and those of the ruling parties, are fully taken into account,” said Miyamoto, who will take up his post in Beijing on April 10.

Miyamoto would not elaborate, but said the Foreign Ministry made the decision “after considering several (recent) situations” involving the two nations.

Bilateral tensions are at their highest in decades. The diplomatic rift has been caused in part by a row over drilling for oil and gas in a disputed area of the East China Sea and Prime Minister Junichiro Koizumi’s repeated visits to the war-related Yasukuni Shrine in Tokyo.

Tokyo and Beijing already have agreed to phase out all new yen loans by 2008, the year of the Beijing Olympics. Many Diet members have pressured the government to cut aid to China, arguing the Asian giant has been growing both economically and militarily.