Instead of disputes and reprehension, joint efforts should be made to enhance Japan's Official Development Assistance (ODA) arrangement with China.

The ODA, an important pillar in Japan's international profile, formally began in 1961 when the country joined the Development Assistance Committee (DAC) in the Organization for Economic Co-operation and Development (OECD).

Today Japan stands as the top donor in the world in terms of ODA.

Japan started providing China with ODA in 1980 when China began looking for overseas investment as the country shifted its focus to economic development and adopted the policy of reform and opening to the outside world.

China lacked capital for large-scale infrastructure construction while developed countries had large quantities of idle money.

Japan's ODA accounts for a large portion of the overseas government capital acquired by the Chinese Government. There are two kinds of ODA: loans of Japanese yen and free technical assistance.

The total amount of the loans granted to China reached 2.6 trillion yen (US$24 billion) according to the first four agreements signed between the two governments. The average interest rate is about 3 per cent. Loans for environmental projects enjoyed a 1.3 per cent interest rate before 1998 and 2.1 per cent afterwards. For some special loans for environment protection projects, the interest rate was only 0.75 per cent. This is lower than most commercial loans and other government loans.

The term of the loans is as long as 30 years and the government can apply for a 10-year extension. By the end of March 2002, Japan had granted about 3 trillion yen (US$27 billion) worth of ODA to China.

The Japanese Government surely considers its own national interests when granting ODA to China.

First, by investing in China's infrastructural facilities, Japan can help improve China's investment climate and pave the road for Japanese business owners to invest here.

Second, the Japanese Government wanted to import energy from China and reduce its reliance on the Middle East. China was still an energy export country in the late 1970s. Political and security concerns were such that good Sino-Japanese relations could help foster a stable regional environment against any threat from the former Soviet Union.

But in the post-Cold War era the Japanese Government passed two ODA outlines in 1992 and 2003 respectively. These outlines put forward that providing ODA should depend on the recipient countries' armaments, arms export, human rights record, adherence to democracy and market economy conditions - all of which greatly politicized the ODA criteria.

Japan's ODA to China was halved from 200 billion yen (US$1.85 billion) in 1999 to 100 billion (US$925 million) in 2003. The policy adjustment was linked to a discernible change in Japan's China policy.

The covert strategic intention and political motives behind the ODA programme cannot be denied. In this aspect, the ODA can be regarded as a barometer of Sino-Japanese strategic relations.

After World War II the Chinese Government gave up its indisputable right for war reparations from Japan based on its good wishes to set up a lasting and friendly relationship with its neighbour and avoid making compensation a heavy burden on war-weary Japanese citizens.

Some responsible Japanese have felt gratitude because of that. They regard the ODA as a substitute form of compensation or even a kind of penitence and apology. Some Japanese scholars think the "historical debt" is a significant factor affecting the policy-making process of the ODA toward China. Officials of Japan's Ministry of Foreign Affairs have also acknowledged the favourable yen loans are reciprocation for China's magnanimity in giving up demands for war reparations.

But as most of China's assistance to foreign countries is free, many Chinese think Japan's ODA assistance should come out of humanitarian considerations without payback or special appreciation attached. Thus the different understanding of assistance has led to different evaluations about ODA by Chinese and Japanese people.

Another point worth mentioning is that, no matter how ODA has been valued, Japan's ODA to China will change with the development of Chinese economy. ODA could even become an archaic term in the foreseeable future. Japan's ODA, however, has contributed to the development of Sino-Japanese ties and will be a significant part of the relations in future.

A historical materialist point of view is needed when examining the ODA.

When criticizing Japan's intention to restrain China by manipulating the aid programme, we do not have to go extremes to refuse it. Disputes over the ODA are no good for Sino-Japanese relations or China's economic development.

Indeed, Japan's ODA to China not only is an issue between the two countries, but also contributes to regional stability and economic development.

When the Japanese Government is adjusting its ODA policy, the two countries should further promote the development of ODA. Efforts could be made to utilize it for China's western development, Northeast China's revitalization and Sino-Japanese energy co-operation. The scope and effectiveness of the ODA could be enhanced.

Compared to endless quarrels over the ODA, blindly asking for appreciation or blaming each other, these steps would better serve the long-term interests of both countries.

Source: China Daily