Japan will settle China’s demand for damages following the leakage of poison gas left behind in Heilongjiang Province by Japanese forces at the end of the war by offering a several hundred million yen “cooperation fund,” government sources said.

The government hopes to bring closure to the Chinese claims by the time Prime Minister Junichiro Koizumi meets with President Hu Jintao in Bangkok next week.

Government sources said the cooperation fund idea is based on a memorandum of understanding signed by Japan and China in 1999 under which Japan promised to provide funds, technology and facilities needed to dispose of chemical weapons left behind in China at the end of World War II by the retreating Japanese military.

Japan is reluctant to associate any payment for the poison gas victims in the Heilongjiang city of Qiqihar as compensation, on the grounds that China gave up the right to claim compensation for wartime damages when the two countries normalized diplomatic relations in 1972.

In August, a group of Chinese workers at a construction site in Qiqihar dug up five decayed drums, including one that contained mustard gas. The gas killed one man and injured dozens of people, including nearby residents.

Japan has acknowledged that the gas had been left behind by the Japanese military.

The Japanese government initially proposed paying around 100 million yen to settle the damages claim, but is ready to raise the sum by several hundred million yen in anticipation of China’s request, government sources said.

Last week, China reiterated its demand for an early settlement of the Qiqihar poison gas claim when Koizumi met with Chinese Premier Wen Jiabao in Bali, Indonesia.

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