The Liberal Democratic Party's top foreign policy planners approved a panel report Friday proposing that Japan's official development assistance to China should be reduced in the light of the domestic economic situation.

Meanwhile, party officials said LDP policy chief Shizuka Kamei agreed the same day to a reduction of up to 3 percent in Japan's overall ODA to developing countries in fiscal 2001.

The report concerning Japan's ODA to China was prepared by the LDP's special committee for foreign economic cooperation and endorsed by the joint division on foreign affairs.

An advisory panel to the director general of the Foreign Ministry's Economic Cooperation Bureau has also prepared a draft of a similar report, to be finalized later this month.

Japan has provided approximately 200 billion yen to China from its ODA program each year.

The LDP committee's report says that, given the importance of East Asian diplomacy, Japan should continue assisting China. It pointed out, however, that Japan's effort to support the building of infrastructure and development projects in the eastern coastal area is close to attaining its goals.

The report also says future ODA should be directed toward the "preservation of the environment and ecosystem as well as helping to reduce poverty" in China.

The document expresses concern over reports of China's growing military expenditure as well as Beijing's economic assistance to third countries. It advises the Japanese government to demand military transparency on China's behalf and for Beijing to provide an explanation of its policies.

The document also calls for wider publicity of information regarding Japan's assistance to China among the people of both countries and suggests that Tokyo offer more "grassroots grants," which are limited to 10 million yen for each case.

Meanwhile, LDP policy chief Kamei -- who had earlier suggested a 30 percent cut in the overall fiscal 2001 ODA budget -- consented to the 3 percent reduction when he met with Senior Foreign State Secretary Seishiro Eto at the LDP headquarters, the officials said.

For fiscal 2000, the government earmarked some 1.05 trillion yen for ODA in its initial budget. A 3 percent reduction would reduce Japan's spending on foreign aid by about 31.4 billion yen.

Eto told Kamei that the Foreign Ministry accepts the recommendation made by a task force comprising the LDP and its two coalition partners -- New Komeito and the New Conservative Party -- that the reduction rate should be 3 percent or less, the officials said.

In response, Kamei told the foreign state secretary he "respects the conclusion" of the task force, according to the officials.