Kan eyes drastic cut to China aid as growth soars

Grants to No. 2, donor, economy questioned

Kyodo News

The Kan administration is considering drastically cutting back on aid to China, given that its economy is now bigger than Japan’s, government sources said.

Foreign Minister Seiji Maehara has instructed his deputies to examine the feasibility of reducing the size of ongoing grants and technical cooperation so the administration can thrash out a plan around June, the sources said Tuesday.

Japan began extending aid to China in 1979 and had provided ¥3.32 trillion in loans, ¥154.4 billion in grants and ¥170.4 billion in technical cooperation as of fiscal 2009. Fresh loans were halted in fiscal 2007.

In the fiscal year through last March, Tokyo disbursed ¥1.3 billion in grant aid and ¥3.3 billion in technical cooperation in such areas as environment protection and energy-saving projects.

Some officials believe providing the aid to China no longer suits the purpose of assisting developing countries. China in its own right has become a significant provider of overseas aid, especially in line with its hunger for natural resource, with African nations among key recipients.

Other officials meanwhile fear a possible negative impact from severing the aid because it has helped ease anti-Japanese sentiment among Chinese people and facilitated an environment in which Japanese firms can do business in China.

Some within the government also note there is still room for Japan to exercise influence through aid to China, citing the growing disparity between the rich and poor and concern over environmental destruction.

Despite its economic growth, China doesn’t make the world’s top 100 countries in per capita gross domestic product, according to the Chinese government. The country is also estimated to have more than 150 million people living below the poverty line — more than Japan’s entire population.

In the review the administration envisions ending fresh aid to China in principle, and instead offer official development assistance when judged inevitable in a budgetary framework outside that for ODA, the sources said, adding aid for projects already being implemented would continue.

A senior Foreign Ministry official also said Japan will continue for now providing grant aid for a project to support young Chinese bureaucrats who study in Japan because it contributes to fostering Japan experts.

Behind the review is worsening public sentiment toward China following the September clash near the Senkaku Islands.