The political economy of Japanese foreign aid: The role of yen loans in China's economic growth and openness

Pacific Affairs

Volumn 79, Issue 1, 2006, Pages 29-48

  Takamine, Tsukasa ^a,b  

^a OKINAWA NATIONAL COLLEGE OF TECHNOLOGY   (Japan)

^b MURDOCH UNIVERSITY   (Australia)

Author keywords

[No Author keywords available]

Indexed keywords

AID POLICY; CONDITIONALITY; DEVELOPMENT AID; POLITICAL ECONOMY;

ASIA; CHINA; EURASIA; FAR EAST;

EID: 33747154102     PISSN: 0030851X     EISSN: None     Source Type: Journal    
DOI: 10.5509/200679129     Document Type: Article

References (51)

1. The OECD's definition of ODA is based on three criteria: (1) ODA is provided by official agencies; (2) its main objective is promotion of economic development and the welfare of developing countries; and (3) it is concessional in character - that is, recipient-friendly, to avoid severe burdens on developing countries. See Rutherford M. Poats, Twenty-five Years of Development Cooperation: A Review (Paris: OECD, 1986), p. 17.
2. For examples, see Hanns Günther Hilpert and Katsuji Nakagane, "Economic Relations: What Can We Learn from Trade and FDI?" in Marie Söderberg, ed., Chinese-Japanese Relations in the Twenty-first Century: Complementary and Conflict (London and New York: European Institute of Japanese Studies, 2002), pp. 130-153;
3. Xiaolan Fu, Experts, Foreign Direct Investment and Economic Development in China (New York: Palgrave Macmillan, 2004);
4. Quing Zhang and Bruce Felmingham, "The Role of FDI, Exports and Spillover Effects in the Regional Development of China," Journal of Development Studies, vol. 38, no. 4 (2002), pp. 157-178.
5. One broad analysis on this theme is: Inada Juichi, "Japan's ODA: Its Impacts on China's Industrialization and Sino-Japanese Relations," in Hanns G. Hilpert and Rene Haak, eds., Japan and China: Cooperation, Competition, and Conflict (New York: Palgrave, 2002), pp. 121-39.
6. For examples, see Margee M. Ensign, Doing Good or Doing Well? Japan's Foreign Aid Program (New York: Columbia University Press, 1992);
7. David Wright-Neville, The Evolution of Japanese Foreign Aid 1955-1990 (Melbourne: Monash Development Studies Centre, 1991);
8. Peter J. Schrader, Steven W. Hook and Bruce Taylor, "Clarifying the Foreign Aid Puzzle: A Comparison of American, Japanese, French, and Swedish Aid Flows," World Politics, vol. 50, no. 2 (January 1998), pp. 294-323.
9. For more details of Interdependence Liberalism, see Robert O. Keohane and Joseph Nye, Power and Interdependence: World Politics in Transition (Boston: Little, Brown, 1977);
10. Richard Rosecrance, The Rose of the Trading State (New York: Basic, 1986);
11. Ernest Hass, "Turbulent Fields and Theory of Regional Integration," International Organisation, vol. 30, no. 2, pp. 173-212.
12. For more details on Institutional Liberalism, see Stephen D. Krasner, ed., International Regimes (Ithaca: Cornell University Press, 1983);
13. Oran. R. Young, International Cooperation. Building Regimes for National Resources and the Environment (Ithaca: Cornell University Press, 1989);
14. Robert O. Keohane, International Institution and State Power: Essays in International Relations Theory (Boulder: Westview Press, 1989).
15. The reason that Arab countries are listed as a separate category in table1 is because unlike the other countries listed, they are not members of the Organisation for Economic Cooperation and Development, (OECD).
16. Japan International Cooperation Agency, Chügoku kunibetsu enjo kenkyükai hökokusho [Report by the China Aid Research Group] (Tokyo: JICA, 1991), p. 17.
17. In this article, the exchange rate of (US$1 = ¥105) is used to convert those official figures that were originally given in Japanese yen into US dollars.
18. Japan International Cooperation Agency, Chügoku kunibetsa enjo, p. 12.
19. Hilpert and Nakagane, "Economic Relations," p. 143.
20. Hilpert and Nakagane, "Economic Relations," p. 146.
21. Thomas Chan, Noel Tracy and Zhui Wenhui, China's Export Miracle, Origins, Results and Prospects (Houndsmill, Basingstoke: Macmillan, 1999), pp. 136-139.
22. Japanese Embassy in China, Economic Division, "Saikin no Chügoku keizai jösei to Nitchü kankei" [Current Chinese Economic Affairs and Japan-China Relations], unpublished report (Beijing: January 2001), p. 10.
23. Hilpert and Nakagane note that before the mid-1980s, when the Chinese market was largely closed to the outside world, there were "apparently special links between Japan and China and the very little trade China had was extremely biased towards Japan." When China opened up to the world, however, its trade became more diversified, and "[c]onsequently the bias towards Japan came down." See Hilpert and Nakagane, "Economic Relations," p. 137.
24. Mark Beeson and Leong Liew, "Capitalism in East Asia: The Political Economy of Business Organisation in Japan, Korea and China," in Mark Beeson, ed., Reconfiguring East Asia: Regional Institutions and Organisations After the Crisis (London, New York: RoutledgeCurzon, 2002), p. 155.
25. Yasutami Shimomura, "Nitchū keizai kankei: kōteki shikin kyōryoku no yakuwari no tenbō" [Japan-China Economic Relations: A Perspective of the Role of Japan's Official Financial Assistance], paper presented at the Liberal Democratic Party Review Committee on Economic Assistance to China, Tokyo, 15 November 2000, p. 1.
26. National Bureau of Statistics of China, China's Statistical Yearbook 2001 (Beijing: China Statistic Press, 2001), p. 410.
27. Japan Bank for International Cooperation, Annual Report 2000 (Tokyo: JBIC, 2001), pp. 10-11.
28. For further details of the procedures, see Marie Söderberg, "Shipping Aid to China," in Marie Söderberg, ed., The Business of Japanese Foreign Aid (London and New York: Routledge, 1996), pp. 216-221;
29. Gang Zhan, "Rail Aid to China," in Marie Söderberg, ed., The Business of Japanese Foreign Aid, pp. 248-252.
30. The Policy Division and the Development Finance Division of the Japanese Ministry of Finance check debt problems, and then the Ministry's Budget Division adds budget considerations to the list of proposed yen loan projects in China. A senior official of the Japanese Ministry of Finance, interview by author, tape recording, Tokyo, 13 April 2001.
31. A senior official of the Japanese Ministry of Finance, interview by author, tape recording, Tokyo, 13 April 2001.
32. Zhang, "Rail Aid to China," p. 268.
33. Japanese Ministry of Foreign Affairs, "21seiki ni muketa taichū keizai kyōryoku no arikata ni kansuru kondankai:Teigen" [Policy Recommendation Report by the MOFA Committee on Japanese Economic Assistance to China for the 21st Century] (Tokyo: MOFA, December 2000), p. 25.
34. For more details of the total project contracts of yen loans to China in 1999, including Japanese contracts, see Japan Bank for International Cooperation, "Kokusai kyōryoku ginkō ga kanri o okonatteiru keiyaku: Heisei 11-nendo ban" [Project Contracts Managed by the Japan Bank for International Cooperation: 1999], unpublished report (Tokyo: JBIC, 1999).
35. Susumu Yabuki, "Chūgoku keizai no kokusaika" [Internationalisation of the Chinese Economy], Gakushikai kaihō no. 830 (2001), pp. 127-128.
36. A senior official of the Liberal Democratic Party, interview by author, tape recording, Tokyo, 27 March 2001.
37. Shinichi Yanai, "Chūgoku to no keizai kyōryoku ni tsuite" [Japanese Economic Cooperation with China], a public lecture given by the then director of the Economic Cooperation Bureau of the Japanese Foreign Ministry, Tōa, no. 159 (1980), p. 73.
38. Economic Cooperation Bureau, Japanese Ministry of Foreign Affairs, Japan's Official Development Assistance Annual Report 1998 (Tokyo: MOFA, 1999), p. 4.
39. A Liberal Democratic Party parliamentarian, interview by author, tape recording, Tokyo, 3 April 2001.
40. A senior official of the Japanese Ministry of Finance, interview by author, tape recording, Tokyo, 13 April 2001. For details of the special yen loan projects in China (¥17.2 billion), which were actually implemented in 2000, see Japan Bank for International Cooperation, JBIC ODA Loans to the People's Republic of China (Tokyo: JBIC, 2001), p. 19.
41. See Don Wagner, "Aid and Trade: an empirical study," Journal of Japanese and International Economics, vol. 17, no. 2 (June 2003), pp. 153-173.
42. Atsushi Kusano, "Yugin kikin tōgō to ODAz' [Merger between the Japan Export and Import Bank and the Overseas Economic Cooperation Fund, and ODA], Shokun vol. 28, no. 5 (1996), p. 178.
43. Japanese Ministry of Foreign Affairs, "21seiki ni muketa taichū keizai kyōryoku," p. 21.
44. Yomiuri shinbun, 3 August 1991.
45. Yoshihisa Komori, "Machigai darake no Chοku enjo" [Japan's Mistaken China Aid] Chūō kōron (March 2002), p. 101.
46. Liberal Democratic Party, "Chūgoku ni taisuru keizai enjo oyobi kyōryoku no sōkatsu to shishin" [Review and Guidelines of Japanese Economic Aid and Assistance to China], policy recommendation report (Tokyo: LDP, December 2000), p. 1;
47. Export and Import Bank of Japan, JEXIM 1999 (Tokyo: JEXIM, 2000), p. 57.
48. Japan Bank for International Cooperation, "Kokusai kyōryoku ginkō no yakuwari to kinō" [Role and Function of the Japan Bank for International Cooperation] (Tokyo: JBIC, 2000), pp. 11-12.
49. As far as China aid is concerned, the Japanese government, from the early stage of the implementation, had an integral policy of assigning ODA and ExIm loans to different objectives. A senior official of the Japan Bank for International Cooperation, interview by author, tape recording, Tokyo, 4 April 2001.
50. Söderberg, "Shipping Aid to China," p. 213;
51. also see Hilpert and Nakagane, "Economic Relations," p. 130. While the demands of American consumers still drive many Japanese companies operations in China, the rapid growth of China's domestic market is making this complementarity more evident. Not surprisingly, in 2005, Japan and China became each other's leading trading partners.