The Foreign Ministry on Thursday submitted a plan to the ruling Liberal Democratic Party calling for a reduction in official development assistance to China.
The plan, submitted to a joint meeting of the LDP's foreign affairs-related divisions, lays the foundation for scaling back Japan's yen loans to China. Yen loans make up the bulk of ODA, which also includes grants of aid and outright offers of financial assistance.
The reduction was laid to the fiscal crisis in Japan and the view that China, with its strong economic development, can build railways and road networks in coastal provinces on its own.
The plan also calls for shifting the focus of ODA from infrastructure development in coastal areas to environmental conservation and improved living standards in inland provinces.
The Foreign Ministry will release the plan as early as the end of October, following LDP approval and the finalization of details.
Once the plan is released, the ministry will decide which projects to aid and the amount of yen loans to be extended to China this fiscal year.
Japan currently draws up country-specific ODA plans for three- to five-year periods with the aim of increasing transparency in its aid policy.
The new plan stipulates that Japan will select projects for its yen loans every year starting this year, replacing its previous one-shot disbursements of aid for projects that extend over a number of years.
Japan provided 1.23 billion yen to China in 1999, 810 million yen of which was yen loans. Only Indonesia gets more aid from Japan. The Foreign Ministry had intended to release its plan for China at the end of March, but there was a delay due to the controversy over Japanese history textbooks.
and Prime Minister Junichiro Koizumi's visit to Yasukuni Shinto, which honors war dead and Class A war criminals.