Japan to reduce aid to China over nuclear test

Japan to reduce aid to China over nuclear test

TOKYO (Reuter): Japan, in a rare use of its economic clout to
send a political message, announced yesterday it would trim grant
aid to China to protest against Beijing's recent nuclear test.

"China's nuclear test immediately after the extension of the
Nuclear Non-Proliferation Treaty (NPT) and after Prime Minister
(Tomiichi) Murayama urged China to stop testing was extremely
regrettable and shocking to Japan's government and people," said
chief government spokesman Kozo Igarashi.

The amount and specific subjects of the penalty would be
decided as Tokyo negotiates future projects with China, he said.

The decision marked the first time Japan has used economic aid
to protest against Chinese policy, a highly symbolic move
calibrated to assuage Japanese public opinion without damaging
Sino-Japanese relations.

"Japan sees its relations with China as very important and
that will not change," Igarashi told a news conference.

"But it is important that China adequately consider Japanese
feelings on nuclear tests, because the government needs citizens'
understanding to extend grants," he said.

Japan joined worldwide protests after the Chinese test in its
western desert on May 15, only hours after the international
agreement on an indefinite extension of the NPT.

Japanese Foreign Ministry officials stressed the decision
would not effect Japan's massive program of low-interest loans to
support China's economic reform program.

Instead, Igarashi said the cuts would affect grant aid, a tiny
component of Japanese aid. Projects already decided would not be
affected, he added.

Japan gave 7.8 billion yen (US$91.8 million) in grant aid to
China in the 1994 financial year, only three percent of all grant
aid extended last year, foreign ministry officials said.

The ministry has not made public figures for the 1995
financial year, which began in April.

By comparison, China has borrowed 1.5 trillion yen ($18.7
billion) from Japan since 1979 at favorable interest rates and
was set to get 580 billion yen ($6.9 billion) more for a three-
year period from 1996.

An official at a private Japanese bank active in China played
down the economic impact of a cut in grant aid.

"The grant aid is not such a large amount and there are only a
limited number of trading houses involved in it," he told
Reuters. "We do not see this as having a very big economic
impact."

Murayama's move responds to criticism that Tokyo does not
enforce policy guidelines which say aid is subject to a review of
recipient countries' efforts to curb military spending and to
stop the proliferation of weapons of mass destruction.

Chinese leaders rebuffed Murayama leaders during a visit to
Beijing early this month when he asked them to join the world's
other nuclear powers in halting atomic tests.

With the exception of China, the world's declared nuclear
weapons states -- the United States, Russia, France and Britain
-- have suspended tests. A global treaty to ban them is under
negotiation in Geneva.

China says it needs more tests to bring its arsenal up to date
before a test ban treaty is agreed next year.