Japan should quickly deregulate its markets and reform its policies so it can take part in the rapid economic growth of East Asia, the Ministry of Economy, Trade and Industry said in a annual report released Tuesday.

In the White Paper on International Trade 2002, the ministry said the importance of East Asia, including China, is increasing as a manufacturing base and a market for Japan, which is facing a rapidly aging population and slowing domestic demand.

The report, subtitled "East Asian Development and Japan's Course," was approved by the Cabinet on Tuesday.