TOKYO -
Japan's economically strong but politically tense
relations with China are likely to sour further as it
sets out to reallocate and reduce its Official
Development Assistance (ODA) to a China increasingly
coming to be seen as a rival, a threat, and even by some
as an ingrate for Japan's economic aid over the years.
Beijing thus now gets less of Japanese largess, and
there is public support to cut back further.
On November 10, the issue of ODA resurfaced again.
After sending various fact-finding missions into China
in August, a group of Upper House lawmakers in the Diet,
or parliament, said it no longer saw any need to boost
ODA for China. Citing the strong anti-Japanese
sentiment shown during the Asian Cup soccer tournament held
in China in August, the report compiled by the
supra-partisan group pointed out that Japan's ODA for
China may have been invisible to the Chinese public. It
also noted that many Japanese taxpayers feel uneasy
about their money being used to aid China, a nation
growing into a major business rival for Japan (though
China's economic demands have fueled Japan's economic
recovery). The report thus called for "gradual
reductions" in Japan's ODA for China and proposed that
the government consider the possibility of ending yen
loans to China altogether, a position supported by
Foreign Minister Nobutaka Machimura.
Japan's ODA, which consists of grants, aid and
technical assistance, is funneled through multilateral
agencies such as the Asian Development Bank, the United
Nations and the World Bank, as well as through the
Japan International Cooperation Agency (JICA).
Currently, Japan's US$8.9 billion annual ODA budget is 30%
lower than 1997. This amount is the second-highest after the
United States, which gave away $15.8 billion largely as
a response to the terrorist attacks on September 11,
2001, ostensibly to sever the links between poverty and
terrorism.
In terms of geographical spread,
Japan's ODA has been very extensive. Since 1954 - the
year marking Japan's participation in the Colombo Plan,
which gave ODA its initial shape - Japan has provided
some $221 billion in ODA to 185 nations. Nevertheless,
falling tax revenues over the last decade, made worse by
the bursting of the bubble economy in 1989, has reduced
Japan's ODA budget along with other government
expenditure by 5% in the last five years.
The
Foreign Affairs Ministry is seriously concerned with the
shrinking ODA. This is because Japan is entering an
important phase in which it seeks to be a more
proactive player in the world stage. Arguably, without
ODA, it has been more difficult to win over various
countries, say foreign ministry officials. As a senior
ministry official told the Daily Yomiuri, "Whenever
Japan runs for non-permanent membership of the United
Nations Security Council, it gets support from
developing countries. This is a direct result of Japan's
ODA."
Senior bureaucrats of the Foreign Ministry
in Kasumigaseki clearly value the utility of ODA despite
the "checkbook diplomacy" criticism attached to it - an
image Japan has tried hard to shed. Newly appointed
Foreign Minister Machimura, for instance, cited the
reunion of former abductee Hitomi Soga with her family
in July in Jakarta as a successful product of ODA. This
is because Indonesia, a longtime ODA recipient, "was
willing to cooperate with Japan", said Machimura. Yet
the cutback is almost inevitable because of the
declining tax revenue and the public pressure
surrounding ODA to China.
According to a survey
conducted by the Cabinet Office in October 2003, 19% of
the people surveyed believe Japan should continue
providing active economic assistance to all countries
and 26% believe the country should give as little aid as
possible. The public's response is, to some extent,
caused by two strategic developments that affect the
impression of Japan's ODA policy, more specifically over
how ODA should best be used.
First, though Japan
extended close to $1 billion to China in loans that
year, the public has begun to question whether such
loans are at all necessary since China has expanded so
dramatically both economically and militarily. Hence
from a peak of $2 billion that China received in 2000,
the figure has now been substantially trimmed. Second,
in autumn 2001, Japan also provided the US with indirect
support by extending economic assistance to Pakistan,
which was cooperating with US military operations
against terrorism. People, both within and outside the
government, have questioned the merit of this assistance
and some are demanding that Japan use ODA strategically
as a diplomatic tool.
According to Michael
Green, an analyst at the Council on Foreign Relations in
New York, the Foreign Affairs Ministry itself introduced
an ODA charter in 1991 that outlined four conditions for
aid recipients: fostering peace, democracy, freedom and
market economy. Of these, China has performed moderately
only in a few. China's successful transition to a market
economy (though many hold that it's far from complete)
has not struck a positive chord with the Japanese
populace either. This is because China is increasingly
seen as an economic rival, in spite of a 60% improvement
in Sino-Japanese trade this year, trade that is now
valued at $140 billion, according to the latest study by
The Economist Intelligence Unit.
Because of the
drop in tax revenue, along with growing public pressure,
the annual value of yen loans to develop railways, roads
and other infrastructure in China have been halved over
the past three years. Instead, the biggest ODA recipient
is now India.
Much of the disappointment with
China is evident in Japanese people bewildered by
China's seeming inability to "feel grateful" for Japan's
economic generosity. The Chinese, meanwhile, are still
deeply angered over Japan's invasion and atrocities in
World War II and the Rape of Nanjing in late 1937 and
into 1938. According to a senior strategist at Sony,
"Japan is disappointed with China's inability to be more
thankful over all these years. The historical issue has
been brought up often even though Japan has done much to
help China develop economically and environmentally," he
told Asia Times Online on condition of anonymity.
Summing up these feelings, Professor Satoshi
Amako of Waseda University, a longtime China watcher,
wrote in the Asahi Shimbun on September 15 that contrary
to what China may think, Japan has continued to feel
responsible for its well being even after China's
voluntary renunciation of war reparations. Amako pointed
out that Japan's ODA involvement with China began with
the construction of Shanghai Baoshan Steel Works, which
symbolized reforms and opening up of China in the early
1980s. In the 1990s, Japanese ODA was also used for
China's infrastructure development and energy projects.
Between 1996 and 1998 alone, up to $2.25 billion
was spent on China's energy projects, with another
$3.27 billion committed to environmental and other
projects. Over the past six years, the use of ODA for
environmental initiatives has become a staple in
Sino-Japanese cooperation. Japan has to date granted
loans to China totaling about US$30 billion.
Yet Sino-Japanese problems refuse to go away, especially exacerbated by
Prime Minister Junichiro Koizumi's yearly visits to
the Yasukuni Shrine to Japan's war dead, including Class
A war criminals. Complaints about China's mismanagement
of Japan's ODA have not abated either. Last
month, Foreign Minister Machimura claimed that "China
is not taking sufficient measures to protect the environment
... If things continue as they are,
polluted air and acid rain will keep coming over to
Japan."
Japan's ODA
policy is now at a turning point because aid given to China
is increasingly growing controversial at home. The
Foreign Affairs Ministry clearly sees China as a
"liability" insofar as ODA is concerned. In view of the overall
shrinking ODA and Japan's need to win over other friends
and allies with "checkbook diplomacy", it is inevitable
that funds flowing to China are set for further
downsizing.
Phar Kim Beng is a regular
contributor to Asia Times Online. He is currently on a
Sumitomo Foundation fellowship, where he is studying the
state of Japanese social sciences. He was trained in
international relations and strategic studies, first at
Cambridge University, later the Fletcher School and
Harvard University.
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