China has informally asked Japan to extend between 400 billion yen and 450 billion yen in official yen loans between fiscal 1999 and 2000 to help finance the communist country’s infrastructure and other development projects, government sources said August 4.

The informal request comes at a time when the governments of Tokyo and Beijing are preparing for formal talks to determine the size of such low-interest loans to be provided to China during the last two years of the current five-year loan program, which began in fiscal 1996, the sources said. The official talks are expected to begin as early as autumn after Beijing submits a list of projects it hopes to implement using yen loans during the two-year period, the sources said.

Tokyo and Beijing will probably seek an agreement on the loan provision for fiscal 1999 and 2000 before President Jiang Zemin’s expected official visit to Japan next spring, at the latest, the sources said. Prime Minister Ryutaro Hashimoto is scheduled to visit China early next month.

Hashimoto and Jiang met in the Philippines last November during the annual summit of the Asia-Pacific Economic Cooperation forum and agreed to an exchange of visits to repair relations that have plunged to their lowest point since the two countries established diplomatic ties in 1972.

The two countries have so far succeeded, at least in reversing the downward spiral of Sino-Japanese relations that was caused by disputes over Chinese nuclear tests, the Japan-U.S. security declaration, Hashimoto’s visit to Yasukuni Shrine where Japanese war criminals are enshrined, and competing claims of sovereignty over the Senkaku Islands — or the Diaoyu Islands as they are called in China — in the East China Sea.

The current five-year loan program is the fourth multiyear loan program since Japan began providing yen loans to China in the late 1970s. At the end of 1994, Japan agreed to extend 580 billion yen in loans to China for 40 infrastructure and other projects between fiscal 1996 and fiscal 1998. But the size of loans for the last two years of the five-year loan program was not set at that time under the “three-plus-two” formula.

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