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Japan may freeze

most aid to China

TOKYO: Japan's chief government spokesman said on Monday that Tokyo is considering freezing a large part of its grant aid to China to protest Beijing's nuclear tests, Kyodo news agency reported.

But low-interest yen loans would be untouched, it said.

Chief Cabinet Secretary Koken Nosaka told a news conference the government would pay due attention to a demand by ruling coalition parliamentarians urging a freeze on grant aid, the report said.

Grant aid to medical projects and other humanitarian aid projects would be exempted from the freeze, Nosaka was quoted as saying.

Kyodo quoted foreign ministry sources as saying that as a consequence, grant aid to China this financial year would probably amount to about 500 million yen ($5.20 million), down from 7.8 billion yen ($81.2 million) in fiscal 1994.

A formal decision would be made at Tuesday's cabinet meeting, Nosaka said.

He said Japan would not touch low-interest yen loans, which make up the bulk of its financial aid to China.

"The measure will be taken to make a clear declaration of displeasure. It does not represent a change in Japan's basic policy to provide aid to China," Nosaka was quoted as telling reporters.

Low-interest loans are designed to be provided over a period of several years, and Japanese foreign ministry officials have said they do not wish to cut yen loans which have already been officially pledged to China.

Grant aid is provided after study of specific projects.

Beijing has carried out nuclear test blasts twice this year - earlier this month and in May - provoking angry protests from Japan and other countries.

Japan announced a trimming of grant aid to China shortly after the May test.-Reuter