Japan’s Foreign Aid to China Conundrum

Abstract

The Official Development Assistance (ODA) programme has been a relatively overlooked area of concern for the Japanese Ministry of Foreign Affairs (MOFA). Today, in light of Japan’s decade long period of economic stagnation and recession, the ODA programmes are under review. This is especially true for the ODA programmes to China.

Having been the world’s top ODA donor since 1991, Japan is currently considering cutting back on its ODA budget. The reason is primarily due to Japan’s decade long economic recession. Koizumi Junichiro, Japan’s Prime Minister, announced that there will be a 10 percent cut in the ODA budget for fiscal year 2002. This reduction is causing many countries to fight for their share of the funds. In response to this, a United Nations official has cautioned Japan that the budget cut will cause further economic damage to the region (Japan Times 24/8/01).

 ODA Aid to China is being debated by many in Japan. Many Japanese believe that the amount of aid given to China is too high since China is thriving economically. It has achieved the status of the ‘world’s fastest  growing economy’ and the World Bank has forecasted that China will surpass the United States as the world’s largest economy by the year 2020. Many Japanese have expressed concern over China’s nuclear testing and its ever growing military. However, Japan also believes that it cannot afford to risk damaging its fragile relationship with China because they need China for economic and political reasons.

 In this paper, reasons for cutting the ODA budget for China will be discussed. Despite the soundness of the reasons proffered by the Japanese for cutting the budget, this paper argues that Japan should not reduce its ODA to China. The political fallout may be too onerous and limit a long-standing cornerstone policy of maintaining a good and mutually beneficial relationship with China. Its aid programme, however, should shift more towards achieving humanitarian goals aimed at trying to expedite social development in China’s poorer provinces.