Assessing the effectiveness of Japan's ODA policy towards China: whether Japan has realized its national interests

Qian Qin (UNSW, Sydney, Australia)

International Trade, Politics and Development

ISSN: 2586-3932

Article publication date: 28 November 2023

Issue publication date: 12 April 2024

690

Abstract

Purpose

This research explores the intricate dynamics of national interests realised through Japan's official development assistance (ODA) to China. It aims to deepen the understanding of these mechanisms, detailing the extent to which Japan has accomplished its national interests.

Design/methodology/approach

The paper applies the role theory and narrative analysis to elucidate Japan's national role conception and its categories of national interests with regards to its ODA policy. It utilises both qualitative and quantitative methods to examine the success rate in achieving Japan's diplomatic objectives and how those interests have manifested over time.

Findings

The findings suggest a mixed outcome. Whilst Japan's ODA to China has helped in expanding trade and fostering mutual understanding and cooperation, it has been less successful in promoting democratic governance in China or effectively counterbalancing China's regional power. Hence, the realisation of national interests through ODA is a complex process contingent upon numerous factors.

Originality/value

This study stands out for its multifaceted approach in examining Japan's ODA policy towards China, integrating both quantitative and qualitative methodologies and applying the role theory in the context of international development aid. It fills a significant gap in the literature by analysing the interplay between national interests and foreign aid, providing nuanced insights into the successes and challenges of Japan's pursuit of its diplomatic objectives. The study's findings have important implications for understanding the complexity of international aid dynamics and can inform future policy decisions in the realm of international relations and foreign aid.

Keywords

Citation

Qin, Q. (2024), "Assessing the effectiveness of Japan's ODA policy towards China: whether Japan has realized its national interests", International Trade, Politics and Development, Vol. 8 No. 1, pp. 15-33. https://doi.org/10.1108/ITPD-06-2023-0015

Publisher

:

Emerald Publishing Limited

Copyright © 2023, Qian Qin

License

Published in International Trade, Politics and Development. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at http://creativecommons.org/licences/by/4.0/ legalcode


1. Introduction

Even though the Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD) adopted official development assistance (ODA) as the “gold standard” of foreign aid in the 1960s, foreign aid is not a new word to the international politics. For instance, the foreign aid provided by France supported the United States of America in the Revolutionary War against the Great Britain in the 18th century, and the Ming Dynasty's provided direct military assistance to Korea in the 16th century. In other words, the history of foreign aid is even longer than the history of the Westphalian state system, established in 1648.

Although there are different definitions of foreign aid, it is, in general, a voluntary transfer of resources, including but not limited to food, goods, money and expertise, from the donor country(s) to the recipient country(s) (Morgenthau, 1962; Riddell, 2008).

According to OECD, ODA is concessional financial assistance provided by official agencies to promote economic development and welfare in developing countries (OECD, 2020). Though voluntary, neither donor nor recipient governments are uninterested in how and why their money, even if in the name of “aid”, is spent (Arase, 1995). There are scholarly debates on the motivation of donor countries. For scholars from the realism school, foreign aid is simply “an instrument of political power and policy” (Liska, 1960, p. 14). The core motivators for realists are political and strategic considerations (Morgenthau, 1962; Alesina and Dollar, 2000; Korb, 2008). Liberalism provides different perspectives on foreign aid, including globalisation, interdependency and international institution, where foreign aid is considered as a set of measures designed to enhance the socioeconomic and political development of recipient countries (Chenery and Strout, 1966; Hattori, 2001). For constructivism, ideological or moral considerations matter in foreign aid, and countries might mimic the aid behaviour of the traditional donors to be a “good” actor in the international society (Lumsdaine, 1993; Opeskin, 1996; Meernik et al., 1998; Brown and Grävingholt, 2016). However, as a general proposition, foreign aid is highly politicised, and even humanitarian aid performs a political function (Arase, 1995).

National interests play a crucial role in shaping foreign aid policies, with the role theory offering insights into how nations perceive their roles in international relations and understand their national interests. Japan's aid policy, distinct from other major donors, is more economically focused and aids trade partners over countries with humanitarian needs. Japan's ODA is a key diplomatic strategy, with China being a significant recipient.

The objective of the paper is to demonstrate the history of Japan's ODA to China, and more importantly, examine whether Japan's ODA to China is a successful policy or in other words, realizes the national interests of Japan.

2. Beginning of Japan's ODA to China

With the rapid recovery of Japan's economy, Japan became the most developed countries in Asia. In the 1960s, Japan achieved an average real gross domestic product (GDP) growth rate of 8% a year. In 1970, Japan's GDP reached the level of 200 bn US dollars. Three years later, Japan's GDP doubled, reaching 432 bn US dollars.

The initial form of Japan's foreign aid was the war reparations to several Asian countries, and then official development assistance in the 1960s. In the 1970s, Japan became one of the largest donor countries, and foreign aid also became one of the most important foreign policies of Japan.

Since the beginning of the 1970s, the alteration in the relative strength of the United of America and the Soviet Union has undoubtedly affected the international situation, accelerating the multi-polarization of the world. China had also become a more important player in the global politics. In addition, Japan, as an emerging power, was trying to promote its political influence through economic diplomacy.

Beginning in 1977, the Chinese Government explored the potential of using foreign capital and technology to develop the national economy. This led to market reforms initiated in 1978, officially known as China's Reform and Opening Up. In August 1978, the Treaty of Peace and Friendship between China and Japan was signed. On 3 September 1978, Deng Xiaoping, the then leader of China, met with the delegation of the Japan–China Friendship Parliamentarians' Union (Nitchū Yūkō Giin Renmei), led by Hamano Seigo, the President of the Union. Deng emphasized that Sino–Japanese relations were prior to any other bilateral relations, and China was willing to cooperate with Japan on issues such as production techniques and market management (Kondō, 1978). In October of the same year, Deng visited Japan, where he was invited to visit several modernized factories and the high-speed railway. The experience in Japan is believed to inspire Deng regarding the economic reform in China, leading to the decision introducing Japanese investment and advanced technique (MoFA of China, 2022).

On the other hand, the Government of Japan started to investigate the further cooperating potential with China. There were proposals in the Liberal Democratic Party even in the early 1970s that Japan might take the use of the OECF's funds for exports to China, bypassing the limitation due to the Yoshida Letter (yosida syokan) (Jin, 2000). Since the normalization of the Sino–Japanese relations in 1972, the trade between two countries had been continuously increased. In general, MoFA, MITI and MoF are the three important governmental bodies that wield significant influence in various aspects of Japan's economy and international relations. These agencies often find themselves in competition with each other as they pursue different priorities and goals. The bureaucratic complexities also result in competing definitions of the national interest in the context of Japan (Rix, 2010). The MITI, as the main agency responsible for promoting Japan's international trade, represented the interests of the commercial and industrial community; the MoFA focused on promoting Japan's diplomatic relations with other countries and ensuring its national security, which often involves negotiations and agreements on trade and economic cooperation, potentially clashing with the objectives of MOF and MITI; and the MoF is responsible for managing the country's fiscal and monetary policies, seeking to maintain a balanced budget and stable currency.

The private sector, especially the large-scale companies, were very interested in promoting the trade with China, and therefore became the most active actors trying to influence the government's decisions on ODA to China. Amongst a number of associations and economic groups, the Japan–China Economic Association and the Japan Business Federation (Keidanren) are the most important and influential organizations. Their then presidents, Inayama Yosihiro and Dokō Tosio, visited China and met with Premier Zhou Enlai, Vice Premier Li Xianian, Gu Mu and other high-level officials several times, becoming a bridge between the leadership of two countries (Japan-China Economic Association, 2020).

In the September of 1978, Ōhira Masayosi successfully completed his cabinet. He had to make the political decision on Japan's ODA to China with a variety of opinions from his partners and opponents. Compared to his predecessor, he held a more positive attitude to China. On 1 March 1979, even during the period of Sino–Vietnamese War, Ōhira confirmed with Kōmoto Tosio as the Chairman of Policy Research Council of the LDP that Japan might provide yen loan through OECF if China requests (Takahara and Hattori, 2012). By the efforts on negotiation and cooperation made by Ōhira, the cabinet achieved consensus on the principles of ODA to China.

It is believed that the loan-related issues was discussed in different governmental and diplomatic meetings before the end of 1978, when Li Qiang, the Minister of Foreign Trade of China, confirmed at a press conference in Hong Kong that China may consider accepting loan between government (Wang, 1978, pp. 864–865). On 5 December 1979, Ōhira visited China, officially informing China the final decision made by the Government of Japan, marking the official start of the Japan's ODA to China.

3. From development to recession

Japan's ODA to China mainly includes the three types of assistance: (i) loan aid (yen loan or ensyakkan); (ii) grant aid and (iii) technical cooperation. Amongst these three types of assistance, loan aid is the largest and most influential one. The last loan aid was provided in 2007, but Japan decided to continue providing grant aid and technical cooperation. Anyhow, because the maturity of the yen loan to China was usually set between 20 and 40 years, a large amount of the loan has not been repaid yet. The author divides the ODA to China history into four periods: (1) Starting period (1979–1983); (2) Development period (1984–1988); (3) Conversion period (1989–2000) and (4) Recession period (2001–present).

3.1 Starting period (1979–1983)

When Gu Mu visited Japan and met with Ōhira in 1979, he brought eight proposed loan projects as a formal request, two of which, related to the construction of the hydroelectric power station were rejected by the Government of Japan, making the total amount of the projects decrease from 5.5 bn US dollars to approximately 3 bn US dollars (House of Councillors, 1979).The six loan projects decided by the Government of Japan is shown as follows. Table 1 also shows the three grant aid projects provided in 1979.

In the July of 1980, Suzuki Zenkō became the 70th Prime Minister of Japan. He did not change the policy to China during his term of office. From 1979 to 1983, Japan has provided 300 bn of yen loan to China, as the first round of yen loan. Besides, Japan also provided 17.461-billion-yen grant aid to China during this period.

3.2 Development period (1984–1988)

From 1984 to 1990, the total amount of the yen loan to China was 693.424 billion JPY, as shown in Figure 1. In addition, Japan also provide 63.109 bn JPY of grant aid for 64 projects, mainly focused on agriculture, medicine, natural disaster and education institution such as Chinese Academy of Social Sciences, China Foreign Affairs University and Dalian University of Foreign Languages (MoFA of Japan, no date). Due to the rapid development of Japan's ODA to China, China had become one of the largest recipients of Japan's bilateral aid since the early 1980s.

However, because of several negative diplomatic incidents, including the “Incident of Kōka Dormitory” [1], Nakasone's formal visit to the Yasukuni Shrine [2], and especially the Yanagiya Kensuke's criticism against Deng Xiaoping [3], the Sino–Japanese relations probably had not been promoted as expected.

The Prime Minister, Takesita Noburu, took the office in the November of 1987. To improve the bilateral relations, Takesita visited China with the third round of yen loan as a “omiyage” (gift) in the August of 1988. Two governments soon reached a consensus, and the size of the yen loan was nearly doubled. The package included 810 bn of yen loan for 42 construction projects, including fertilizer factory and the aviation control system, which are not included in the first and second round of yen loan. Besides, grant aid and technical cooperation were also included in the package. The Chinese leadership expressed their thankfulness to Takesita, and Deng even commented that a “new era” of Sino–Japanese relations was coming [4].

3.3 Conversion period (1989–2000)

Although both China and Japan had strong willingness to make the bilateral relations better, the relations were suddenly frozen because of the Tiananmen Square Incident happened in 1989. The United States of America and the European countries soon decided to impose sanctions against China for violating human rights.

On 3 June 1989, Uno Sōsuke, after the sudden resignation of Takesita, was placed as the Prime Minister. He was not an ideal candidate and had limited time and power to make any major change of policies. At the House of Representatives, facing the questions from the parliamentary members, Uno only described the incident in China as “a regretful situation” (ikanna zyōsei), expressing his “concern” (yūryo) on the situation and willingness to provide medical assistance (House of Representatives, 1989).

On 8 June 1989, the International Cooperation Bureau of the MoFA of Japan announced that all the ODA projects were forcedly suspended (suikō hunō) due to the chaos in China, and over 300 Japanese experts working in China were required to return [5]. At the G7 Submit held in July, Japan announced that the third round of yen loan would be suspended, and Japan would impose migration restriction to China for the safety of Japanese citizens. However, compared to other G7 members, Japan's attitude towards China was ambiguous. While the United States of America had imposed sanctions against China, Japan seldom criticised the Government of China directly. Notwithstanding the ambiguous attitude of Japan, Zheng Tuobin, the Minister of Foreign Economic Relations and Trade of China criticised that even though Japan disagreed with the sanctions against China openly, Japan actually imposed heavier de facto sanctions against China (Zhang, 2016, p. 175).

In 1992, the Japanese cabinet issued the Japan's ODA Charter, officially confirming the four principles of Japan's ODA, including environment-oriented, military-avoided and democratization promotion (MoFA of Japan, 1992). The 1992 ODA charter is a symbol of the conversion of Japan's ODA policy. Japan intended to connect foreign aid to human rights and domestic politics of the recipient countries, making the foreign aid policy more strategy oriented.

In addition, Japan had to reconsider the amount and efficiency of its ODA projects due to economic recession and financial difficulties. Thus, the negotiation regarding the fourth round of Japan's yen loan to China moved slowly with difficulties. Domestically, some politicians and scholars proposed to decrease, suspend or end the ODA to China, especially when China continued its nuclear testing in the mid-1990s.

As a result of the continuous negotiation, two parties decided to divide the fourth round of yen loan into two periods, and 580 bn JPY would be provided during the first period (1997–1999). In 1998, after coordinating with China, Japan decided to provide another 390 bn JPY during the second period (1999–2000). The fourth round of yen loan is the last yen loan provided by the Japanese Government taking the form of “round”.

3.4 Recession period (2001–present)

Since 2001, Japan decided to provide yen loan with the form of “single-year review” instead of “five-year round review” (JICA, 2002). The amount of ODA was also decreased by 25%.

In the August of 2001, Yamasaki Taku, the then Secretary-General of LDP, publicly stated that “people from the South East Asian countries are thankful to Japan's ODA, which is different with the Chinese people who know little about the assistance to China”, and proposed to reconsider the ODA to China policy [6]. However, the Japanese politicians had not reached a consensus on whether Japan's ODA to China should be ended. As a contrary view, Kawaguti Yoriko, the Minister of Foreign Affairs, then stated that “ODA to China is still necessary” (mada hituyōda) [7].

The major division of the loan projects has also changed greatly from infrastructure to environment protection. For instance, six of the eight yen loan projects started in 2002 was directly related to environment, while other two projects were also somehow connected to environmental protection (MoFA of Japan, 2003a). As shown in Table 2, none of the projects were located in eastern China.

Due to several diplomatic incidents including the Koizumi's visit to Yasukuni Shrine, the Sino–Japanese relations became worse during PM Koizumi Zyun'itirō’s term of office. In 2004, Koizumi openly stated that it was the time when Japan's ODA to China should be ended (sotugyō) [8]. On the other hand, Li Zhaoxing, the Minister of Foreign Affairs of China, then responded that China would be fine without Japan's assistance and the Chinese people had the ability to develop their own countries with their own power, wise, determination and confidence.

In the opinion of Japanese Government, it is understandable for one country to receive foreign aid while providing foreign aid to other developing countries, as Japan did before. However, hosting the Olympics might be a symbol for one country being more developed, and 2008 Beijing Olympics was considered as an appropriate event to end the yen loan to China, agreed by both China and Japan. On 1 September 2007, Yang Jiechi, the Minister of Foreign Affairs of China, then completed the final exchange of notes with Kōmura Masahiko, the Minister of Foreign Affairs of Japan for the last six loan yen projects (MoFA of Japan, 2007). The total amount of the yen loan is 46.3 bn JPY, approximately 22% of the amount of yen loan in fiscal year 2000.

Even though no more yen loan projects have been proposed since 2008, the assistance for grass-root (kusa no ne enzyo), which aims to provide grant aid of no more than 10 m JPY to local and small-scale programmes, is still under operation. Even in 2016, a new technical cooperation project named Project for Environment Friendly Society Building was developed, which will be completed in 2021 as planned. On 28 January 2020, the Japanese Government provided emergency assistance to China for the pandemic of COVID-19, which is counted as grant aid (MoFA of Japan, 2020b). Therefore, even though the amount and number of ODA projects to China is limited, China continues to benefit from Japan's ODA indeed. However, these projects are basically society-oriented cooperation rather than economic cooperation. Figure 2 shows the amount of Japan’ ODA to China in 2000–2018 (MoFA of Japan, 2020a).

4. Japan's role and national interests

The diplomacy of any country is always aimed to realise the national interests, though in various ways. Even though foreign aid is somehow considered as the money given by rich countries out of charity, the governments thereof always have to inform their taxpayers how and why their money is used. It is therefore not surprising that the name of the ODA Review Final Report of Japan, published in June 2010, is “Enhancing Enlightened National Interest”.

However, national interests refer to too many conceptions. According to Morgenthau (1952), national interest has two factors: rationally demanded and changeable, and to pursue the national interest is a necessity. The author agrees with the statement that “national interest has proven to be a very elastic concept with multiple meanings across time and space” (Hook, 1995, p. 5). The territory is obviously highly connected to the national interests; the economic benefit is also apparent. However, the reputation of one country, or the so-called soft power, smart power or sharp power, is more difficult to analyse, especially when some interests might be controversial.

Since Holsti (1970) systematically extending the concept of role in sociology to foreign policy analysis, many scholars have contributed to the development of the role theory. Walker (1987) suggests that the role theory has a descriptive, analytical and organizational value, and Wish (1980) comes up with the national attribute-role conception model, and conducts content analyses of speeches by 29 decision-makers from 17 nations. She concludes that the policymakers, who believe that their nations have larger influence domains are more active in the international system. Recently, Wehner (2020) introduces how interpretive narrative analysis allows the researcher to understand the change of role within a ruling narrative domestically and internationally, providing practical research methods for understanding the national roles.

Through narrative analysis, we may realise how the Government of Japan and the leaders thereof understands their role and the interests of their country. Based on the role conception of Japan, the author examines the national interests and the realisation thereof.

Japan is undoubtedly an economic power, and is sometimes described as “Civilian Power”. Maull (1990) suggested that a civilian power, for example Japan, would prefer to cooperate with other countries to promote the collective international goals; and realise the national goals and interests with economical method rather than the military method. Besides, some scholars also pointed out that group-orientation was a typical characteristic of the cultural norms as well as the national role of Japan.

Narrative analysis is widely used in the field of foreign policy analysis. Narrative, as a terminology, refers to spoken or written text that describes and interprets an event or a series of actions that are connected within some sort of sequence (Czarniawska, 2004). The narration of the Japanese government regarding the ODA to China was not always consistent, but related to the change of domestic politics and international situation.

In the 1970 and 1980s, trade, energy and friendship were the three priorities of Japan's China policy. Firstly, as we discussed, the large-scale companies were very interested in promoting trade with China, which relied on a stable bilateral relationship. Most of the visits and meeting between two countries in the 1970s were also related to the trade. Secondly, energy security was a significant part of Japan's comprehensive security policy, and Japan's attention on mining and infrastructure during the negotiation for ODA projects proved the significance on Japan's position. Thirdly, friendship with China, and importantly, Chinese people, was also important for the regional security. If China, as the biggest and high potential country in East Asia, could become a friend of Japan rather than an enemy, it would be a great success of Japan's diplomacy. For better friendship, both parties tried to avoid discussing the disputed issues, e.g. the territory dispute regarding the Diaoyu Islands (or Senkaku Islands in Japanese), for not undermining the “friendship”, which is different with the situation in the later period that the territory dispute became a “weapon” of diplomats.

In addition, considering that Japan's aid to Southeast Asian countries started from war reparation, many Japanese in the 1970s might also feel guilty for the sorrow Japanese army brought to Chinese people, and Asian people, during the World War II. As Loutfi (1973) suggested, the Japanese Government might also hold the opinions that the problem of development in these countries is not merely an economic or social question, but a problem of building peace in Asia. Providing aid is not only a way to reduce the moral burden of Japanese citizens but also a way to heal the pain of the citizens of other countries, making a better national image in the recipient countries.

Therefore, the role conception of Japan, during the starting and development period of the ODA to China, could be summarised as: (1) a trade promoter; (2) a regional power and security maintainer and (3) a normalising nation with the responsibility to support its neighbours in Asia.

The role conception gradually adjusted in the 1980s, when Japan had become an economic giant and tried to extend its influence on international politics. In 1992, Nakasone was elected as the Prime Minister of Japan. His political slogan, “the final settlement of the post-war politics” Nakasone proposed political slogan of “the final settlement of the post-war politics” (sengo seizi no sōkessan) could be considered as the signal of the change of Japan's role conception. He tried to strengthen the military force of Japan, and even revise the constitution. Even though not a few Japanese politicians and citizens, especially the left-wing, disliked his ideas [9], becoming a great political power was obviously attractive for the people of Japan, the world's second-largest economy with impressive naval strength. The role identification of Japan was changed from a facilitator into a regional ruler and major international actor. Disappointed about Japan's unfavourable position in the Japan–USA trade friction, Ishihara sintarō, a famous right-wing politician, published a best-selling book with Morita Akio, the founder of Sony Corporation in 1989. The title of the book is: The Japan That Can Say No (Nō to Ieru Nihon) (Ishihara, 1992). The Japan That Can Say No (to the United States of America), means Japan is not a follower of the superpower, but an equal partner of the United States of America, a protector of the regional order of Asia, and a contributor to the new global system. The role conception of a regional power and security maintainer was continuously enhanced.

As a result of the formation of the role conception, in 1992, Japan published its first ODA Charter (MoFA of Japan, 1992). The charter clearly stated that “the world is now striving to build a society where freedom, human rights, democracy and other values are ensured in peace and prosperity”, marking that Japan's ODA policy started to focus more on human rights, environment and other political topics. However, it does not mean that development or economic was not important to Japan. As shown in Table 3, development and economy are still the top used words in the ODA Charter.

In 2001, the MoFA of Japan published a report regarding the economic cooperation programme for China. The report emphasized that “the stability and prosperity in the East Asian region in which Japan is located is indispensable”, and the economic cooperation is therefore significant (MoFA of China, 2001). However, the report stated that China had been able to make more “self-help” efforts, and the “enormous demands for aid” was “impossible and inappropriate”. Besides, the report required the government to encourage China to make efforts to enhance publicity on Japan's ODA.

However, as a country on a fast line of development, change of the role conception of China might conflict with Japanese changing role conception, leading to the role conflict. China would not be happy when Japan tried to teach it how to reform its political and economic system, especially considering Japan was a “student” of China during its long history. The role conception of China is always the “centre of the world”, as its name, Zhong Guo, shows, which would sooner or later conflict with Japanese role as a regional protector. It can therefore explain the reason why there were more bilateral frictions in the 1990s and the 2000s. As a researcher wrote, “Japan and China have never experienced coexistence as great powers,” (Syōzi, 2012) and they are doomed to suffer from mutual rivalry.

In 2003, Japan revised its ODA charter. Proud as “the first nation in Asia to become a developed country”, Japan was enthusiastic about sharing its experience with other developing countries, and participate in international politics more actively (MoFA of Japan, 2003b). On the other hand, China was speeding up its own foreign aid projects. According to the Information Office of the State Council of China, China's financial resource for foreign aid has increased rapidly, averaging 29.4% from 2004 to 2009 (Information Office of China, 2011). As discussed, both parties understood that Japan's ODA to China was reaching the end. In 2015, Japan published the Development Cooperation Charter, but we would not further discuss the narrative since it had little relevance with the national interests regarding Japan’ ODA to China.

To conclude, the role conception of Japan at the starting point of Japan's ODA to China was: (1) a trade promoter; (2) a regional power and security maintainer and (3) a normalising nation with the responsibility to support its neighbours in Asia. The role of “a normalising nation” was minimized due to the successful normalisation and increasing strength of Japan, while the role of a regional power was enhanced and the role of a contributor to the peace of world emerged.

5. Discussion: whether Japan has realised its national interests

Behind the role conception, the national interests behind are summarised accordingly: (1) promoting trade; (2) ensuring the energy security; (3) maintaining regional security through improving bilateral relations and reducing the anti-Japanese sentiment; (4) promoting reputation of Japan for reducing the negative image during the World War II and (5) making the diplomatic method more pluralistic to maintain the national status. The author will then analyse and examine the realisation of the national interests dividedly.

5.1 Promoting trade

The private sector of Japan was the most active actors encouraging the government to provide assistance to China, which would obviously increase their business opportunities in the great land. The ODA to China might have instant effect on promoting bilateral trade. In 1979, Japan's export to China increased by 21.3% to 3.7% bn USD, and its import increased by 45.5% to 2.95% bn USD (Shijie Jingji Nianjian Bianjibu, 1982, p. 149). The direct investment to China from has also increased considerably due to the increasing trade relations. Econometric analysis results also supports that Japan's ODA was effective in promoting Japan's FDI in China (Blaise, 2005). As shown in Table 4, Japan had soon become one of the most important foreign investors.

The first-mover advantage in emerging markets was essential for winning the completion with other developed countries in the Chinese market. The users of Japanese products would prefer to repurchase the products from the same brands, and the plant import led to a series of following procurement of components and parts.

Japanese companies also took advantages in international bidding for many construction projects, since they had closer relations with the Government of China and the supervising agencies sent by Japan. More immortally, many yen loan projects, especially before the 1990s, were under the conditions called LDC-untying. While the term “general untied loan” means the recipient country could purchase products from any other country with the credits provided by the donor country, LDC-untying is more like a concessional measure to allow procurement in the donor country or the developing countries. Japan, as the donor, obviously stayed on the dominant positions. Even though the chances of winning a deed for Japanese companies decreased in the 1990s due to different reasons, Japanese companies were still on the advantage positions. Some scholars commented that the Japanese Government accessed information on each project through networks of both government and made decisions based on Japan's interests.

It is also easy to understand that a better bilateral political relationship usually leads to a better trade relationship and vice versa. For example, the territory dispute regarding the Diaoyu Island (Senkaku Island) in 2012 led to the nationwide anti-Japanese demonstration and the grass-root voice to boycott all Japanese goods, decreasing the Japanese export to China by 10% compared to 2011 (Shijie Jingji Nianjian Bianji Weiyuanhui, 2014). Thus, the ODA to China, if it has successfully improved the bilateral relations, might indirectly promote the trade with Japan (Suganuma, 1998).

Some scholars also pointed out that foreign aid might contribute to the long-term and broad-based economic development, resulting in the increasing demand for products and service. The donor country will then benefit from the expanded market (Krueger et al., 1989). The increasing supply of raw materials imports also contributed a lot to the stable development of economy and trade of Japan.

In conclusion, Japan's ODA to China contributes largely to the promotion of trade with China in different ways.

5.2 Energy security

Japan has always realised energy is the core of its national security, even before the World War II. Alerted by the Oil Crisis in 1973 and 1979, Japan was seeking for more energy sources. Therefore, as discussed, ensuring energy security is an important objective of Japan's ODA to China.

Besides, many other ODA projects were related to iron and oil, from discovery and production to transportation. In fact, the first long-term trade agreement between China and Japan, signed in 1978, had confirmed that Japan would export seven–eight billion USD worth of techniques and complete plants as well as two–three billion USD worth of construction materials and machines to China during 1978–1982; while China, on the contrary, would export oil and coals to Japan.

As a result, in 1978, China exported seven million tons of oil to Japan; and the number was raised to 15 m tons in 1982. Also, the export of coal was also doubled (Hattori and Marukawa, 2014). However, the investment on infrastructure was usually on long-term basis, which means the investment might not be able to directly output shortly.

Japan's ODA to China was useful to ensure the import of coals, oil and other raw materials, especially in the 1970 and 1980s, which was helpful to realise the comprehensive security of Japan.

5.3 Improving bilateral relations

Most people have an intuition that providing foreign aid will improve the relations between donor and recipient countries. However, in some cases, the improvement of bilateral relations is not a necessary consequence of foreign aid. Moreover, closer relations between Japan and China did not necessarily mitigate friction (MoFA of China, 2001).

To quantitatively measured the Sino-Japanese relations, the Institute of International Relations, Tsinghua University developed the Database of Relations between China and Other Major Countries (zhongguo yu daguo guanxi shujuku) (Institute of International Relations, 2019). The database collected interactions between two countries based on people's daily, and quantitatively provided the values of Sino–Japanese relations on monthly basis.

According to the discussed process of Japan's ODA to China and the mentioned database, it might reflect the relevance between Japan's ODA to China and the variation of Sino–Japanese relations. For example, PM Ōhira visited China and decided to provide ODA to China in the September of 1979, while the value of relations increased 0.4; PM Nakasone visited China in the March of 1984 and confirmed the second round of yen loan to China, while the value increased 0.2 compared to the value in February; PM Takesita visited China and confirmed the third round of yean loan to China in the August of 1988, while the value increased 0.2. On the contrary, Japan decided to freeze the third round of yen loan in the July of 1989, while the values decreased 0.9. However, relevance does not necessarily equal to causality. It is easy to understand that the improvement of bilateral relations might lead to a larger amount of yen loans, and the donor country might cut the foreign aid due to the deterioration of the relations with recipient countries. But the proved relevance itself is still meaningful, reflecting the relations between Japan's ODA to China and the change of bilateral relations.

When it comes to some specific periods, Japan's ODA to China indeed eased the tension between two countries. The Incident of Kōka Dormitory coincidentally happened during the negotiation about the third round of yen loans. Even though the Government of Japan could not affect the judgement decided by the court, China expressed its understanding. Premier Li Peng officially endorsed PM Takesita's opinion that “the Incident of Kōka Dormitory should not affect the good relations between two countries, and should be solved with mutual respect and common efforts” (MoFA of Japan, 1988).

The reason why the economic cooperation failed to continuously improve the political relations partly lies in the clash of historical perceptions between two countries. Japan never links the ODA to China to war reparation, while Chinese leaders and people remember the fact that China abandoned the claim for war reparation, due to complex historical reasons. Although Chinese Government has never officially stated that Japan's ODA to China should be considered as war reparation, there were high-level officials stated that “assistance is not one-sided, but have to be connected with the historical facts about Japan's invasion and China's abandonment for war reparation” (Lin, 2003, p. 223). Considering that the amount of reparation and grants Japan paid to Asian countries came to approximately 6,000 JPY per capita (Arase, 1995, p. 29), the amount of grant aid Japan provided to China is much lower.

In addition, China has been cautious about Japan's political intention. “Never accept economic assistance with political conditions” is always the core conception of China. Some leaders of China even criticised that Japan was “rich and flush” (cai da qi cu) and “insolent and rude” (ao man wu li), reflecting the negative impressions of the Chinese leadership.

To conclude, Japan's ODA to China might somehow improve the bilateral relations, but it did not mitigate friction or make China a more friendly country to Japan. It is therefore, difficult to make a clear conclusion whether and to what extent the ODA projects affect the Sino–Japanese relations.

5.4 Winning kudos

Scholars underscore the significance of kudos in constructing a nation's soft power (Winkler and Nye, 2005). Donor countries, including Japan, expect their aid could enhance cultural ties and indirectly influence the diplomatic policies of recipient countries.

China is not the only recipient country of Japan's foreign aid. Japan has sought to gain political support via foreign aid for many years, but with varied success. Indicated by an opinion poll on Thai–Japanese relations conducted in the mid-1970s, only 11.3% of the people from the category of “general public” agreed that Japan had been fair or too generous to Thailand regarding Japanese trade and investment in Thailand, while 41.6% of Thai people agreed that Japan took unfair advantage of Thailand (Arase, 1995, p. 95). But the positive influence could be long-term and silent, as the Japanese food, music and other cultural products has a large share in the Thai market today (Toyoshima, 2013).

In its ODA projects to China, Japan has emphasized fostering friendship as a key objective. PM Ōhira even stated that keeping friendship with China was worth thousands of billions of Japanese yen (Lin, 2003, p. 223). However, there were critiques from Japan, claiming China minimally publicizes ODA projects, which results in limited local awareness of Japan's assistance among Chinese people.

The Government of China never agrees with the criticism. The Chinese officials emphasised that China had “positively and objectively” introduced the Japan's ODA projects, and most of the projects were actually loan, which had to be paid back by China (Wang, 2005). The diplomats sometimes even vehemently rejected the criticism, deepening the domestic argument in Japan (Qin and Li, 2018).

Deng Xiaoping, the most powerful Chinese leader after 1978, once stated that, “Japan should be introspective rather than arrogant; China should be self-empowered rather than self-abased” (Zhonggong Zhongyang Wenxian Yanjiushi, 2004, p. 1299). From his points of views, Japan's ODA to China as a blend of war reparations and economic cooperation, not mere assistance, and China can become a great power independently. This suggests a divergence in perceived importance of Japan's ODA between the two nations.

As some Japanese scholars criticised, Japan's ODA to China was somehow obscure. In fact, there were more than one hundred ODA projects located in Beijing, including hospital, education, railway, subway and airport. But a survey conducted in 1994–1995 indicated that Japan's ODA to China had lower evaluation and expectation rate in the public opinions (Liu, 1996). However, the government-managed newspaper did report positively on some ODA projects, e.g. China–Japan Friendship Hospital, though the number of reports might not be large, as indicated in Table 5.

Some people, who invisibly benefited from Japan's ODA to China, might have a more positive attitude towards Japan. However, the ceaseless negative incidents, e.g. PM's visit to Yasukuni Shrine, territory disputes and diplomatic unpleasantness as well as the spread of nationalism in both countries, damaged the civil relationship between people of two countries. From this perspective, the foreign aid to China has not successfully won the reputation as expected.

5.5 Diversifying diplomatic methods

Diplomatic methods serve as mechanisms through which one country can influence another, with the capacity to alter another country's will. Foreign aid can be a subtle method to exercise such power, even when it is not explicitly tied to political conditions, as changes in amount, threats of suspension and expertise from donor countries can all impact the recipient's domestic issues. For Japan, whose military force is constitutionally restricted, foreign aid offers a diversified approach to diplomacy.

In 1979, Japan suspended the ODA to Viet Nam due to Viet Nam's invasion to Cambodia. Besides, similar sanctions were used against Cambodia, Cuba, Angola and Afghanistan for punishing the actions of government thereof. On the contrary, Japan provided or enhanced its aid to Thailand and Pakistan when Japan tried to enhance its international influence in specific regions.

However, as discussed, the leadership as well as government of China never considered Japan's ODA as a must. Even more surprising, the policymakers of Japan themselves were affected by the developing interdependence. Given that ODA projects have been tied to Japan's energy security, its government might exercise caution to prevent disrupting energy trade. When Japan's ODA started to focus more on environmental protection, it is hard to believe that the Chinese Government will be threatened for Japanese threat that the protection of the forest in Inner-Mongolia.

Since 1979, China never changed its core policy on significant political issues only because of Japan's sanction, e.g. suspension of ODA projects. In 1994, Japan tried to make the Government of China suspend its nuclear testing, and even froze most of ODA projects in 1995. However, after the successful end of China's nuclear testing, Japan restarted all ODA projects. In 1989, the government of China makes no concession for “begging” Japan's foreign aid. With the economic development, China tends to adopt a tougher diplomatic gesture for it has stronger self-confidence and insistence on exercising its sovereignty (Qin et al., 2021).

Japan's assistance diplomacy was effective in many cases, but not to China. However, it does not mean that Japan's ODA to China has no influence on China's policy. On a long-term basis, the deepening of interdependency might also make China tend to exercise its power more peacefully with Japan. In addition, the economic cooperation stabilised the domestic power of the reformist politicians, who prioritised economic development and modernization over sovereignty (Hagström, 2005). Face (mian zi) or reputation, is more than important for leading Chinese policymakers. Therefore, they rejected to openly make any concession to Japan openly, but were willing to cooperate in many cases.

In conclusion, Japan's ODA to China had a limited effect upon the adjustment of the policy of China. Japan failed to exercise its power over China through raising, suspending or providing foreign aid to China. However, on a long-term basis, China was indeed affected by the deepening of interdependency between two countries.

6. Conclusions

Since 1979, Japan has provided thousands of billions of yen loan, grant aid and technical cooperation. It is difficult to analyse a foreign policy lasted for more than 40 years, but we might have a clearer vision with appropriate research methods.

The objectives of the paper are to examine whether Japan realise its national interests through foreign aid, especially in the case of Sino–Japanese relations. To understand the question, it is essential to firstly understand what the national interests of Japan are, which is, from the author's perspective, connected to the role conception of Japan and the leadership thereof.

The author summarises the role conception of Japan as (1) a trade promoter; (2) a regional power and security maintainer and (3) a normalising nation with the responsibility to support its neighbours in Asia; and the change of the conception when Japan became more powerful, both economically and politically.

Based on the role conceptions, the author classifies the national interests into five categories, as shown in Table 6: (1) promoting trade; (2) ensuring energy security; (3) improving bilateral relations, (4) winning kudos and international status; (5) diversifying diplomatic methods. As a conclusion, Japan has successfully promoted the trade and business between two countries, and somehow ensured the energy security as part of the comprehensive security agenda. Japan has also partly achieved the objectives of improving bilateral relations and diversifying diplomatic methods, though the frictions between two countries happened from time to time. However, Japan has failed to win kudos and international status through its ODA projects in China.

In addition, the Government of Japan might hold the concept that aid produces economic growth, which in turn encourages political stability and the benefits to donor interests. However, as some scholars suggested, the premise itself is doubtful (Rix, 2010, pp. 17–19). The research has also proved that some of the cognition of the Japanese Government on the diplomacy of China as well as the understanding of Chinese leaders on Japan's ODA might be incorrect, leading to some negative effects on the realization of Japan's national interests.

However, the cost of the Japan's ODA was not that high as imaged. Japanese people were used to saving their money in their postal and banking system. The high savings rate therefore led to plenty of loan funds, which means the actual cost of the yen loan, though discounted, is not that high. The Government of Japan considered loans to be rational the system by which loans are repaid as economic benefits accrue to the borrower over a relatively long time (Akiyama and Nakao, 2005). In fact, due to the rapidly increasing of the exchange rate of Japanese yen, China might have to repay even more in the 1990s.

The discussion in this paper also indicates something important. Firstly, the diplomatic objectives are constructed by the national role conception, sometime unconsciously. Secondly, foreign aid, whose initial objectives are usually connected with some specific national interests of one country, does not necessarily realise those national interests. Thirdly, the misunderstanding of the national role conception of the recipient country and the potential role conflict might negative affects the national interests of the donor country.

The paper has not discussed, with a quantitative method, to exactly what extent has Japan realised its national interests. There are mainly two reasons for this situation: the percentage of the national interests realised by Japan through its ODA policy is impossible to quantify; and the percentage is not the main topic of the paper. The author believes that the paper has already discussed the main topics and made the conclusion based on both quantitative and qualitative methods.

The author, therefore, made the final conclusion regarding the realisation of Japan's national interests on Japan's ODA policy to China that the policy in general has achieved some of the diplomatic objectives successfully, but failed to achieve all.

The study's results are meaningful not only for analysing Japan's foreign policy but also for broader International Political Economy studies. The research links the field of international development with foreign policy analysis. The research method employed in this study could potentially be applied to other contexts, such as examining China's foreign aid to Africa and South Korea's foreign aid to Southeast Asia, thereby providing a framework for evaluating the effectiveness and impacts of foreign aid policies in various international contexts. The study provides a valuable foundation and tool for enhancing foreign aid policies and diplomatic strategies.

Figures

Japan's ODA to China, 1984–1988 (100,000,000 JPY)

Figure 1

Japan's ODA to China, 1984–1988 (100,000,000 JPY)

Japan's ODA to China, 2000–2018 (loan aid excluded; 100,000,000 JPY)

Figure 2

Japan's ODA to China, 2000–2018 (loan aid excluded; 100,000,000 JPY)

Projects of the first round of yen loan and grant aid to China in 1979

No.ProjectAmount (JPY, 1979)
1Shijiusuo Port Construction7,085 million
2Yanzhou–Shijiusuo Railway Construction10,100 million
3Beijing–Qinghuangdao Railway Expansion2,500 million
4Qinghuangdao Port Expansion4,915 million
5Hengyang–Guangzhoou Railway Expansion3,320 million
6Wuqiangxi Hydorelectric Power Station Construction140 million
Total amount of loan aid28,060 million
7China–Japan Friendship Hospital Construction430 million
8Machines for Micro Lab of National Beijing Library50 million
9Emergency Aid for Natural Disaster (via Red Cross)200 million
Total amount of grant aid680 million

Note(s): The no.5 and no.6 projects are suspended and transferred to commodity loan projects provided in 1979∼1980, according to MoFA's website as cited

Source(s): Table courtesy of MoFA of Japan, no date

Yen loan projects in 2002

Name of projectRegionAmount (100 million JPY)
Atmospheric Environmental ImprovementHenan192.95
Atmospheric Environmental ImprovementAnhui185.58
Yichang Water Environmental ImprovementHubei84.60
Nanning Water Environmental ImprovementGuangxi121.15
Afforestation and Vegetation CoverGansu124.00
Afforestation and Vegetation CoverInner-Mongolia150.00
Higher Education Project (Regional Vitalization, Market Economy Reform Support, and Environmental Conservation)Inland275.04
Environmental and Living Conditions ImprovementHuman78.82

Source(s): Table by the author

Word analysis of 1992 ODA charter

KeywordWeight
Development24
Cooperation12
Economic8
Environment/environmental conservation6
Asia/Asian6
Relations4
Human rights/humanitarian3
Democracy/democratization2

Source(s): Table by the author

Foreign direct investment to China (contract basis) 1979–1992

Country/RegionAmount (billion USD)Percentage of total
Hong Kong and Macau73.966.7
Taiwan8.57.6
USA8.17.3
Japan5.85.7
Others14.512.7
Total110.8100

Source(s): Table courtesy of Söderberg, 1996

News reports related to Japan's ODA on people's daily

Year808182838485868788899091929394Total
Yen loan51322012205323435
Grant aid/Technical cooperation153510241215344252
Total6667122534110667687

Source(s): Table courtesy of Liu, 1996

Realization of the national interests

Types of national interestsRealisation
Promoting tradeSuccessful
Ensuring energy securityHelpful
Improving bilateral relationsPartly successful
Winning kudos and international statusNot successful
Diversifying diplomatic methodsPartly successful in long-term basis

Source(s): Table by the author

Notes

1.

Located in Kyoto, Kōka Dormitory was bought by the Republic of China in the 1950s. The dormitory was involved in a case in 1967 (Taiwan vs eight Chinese students), but the situation got more complicated due to the normalisation of Sino–Japanese relations. The case had not been finally resolved until 2018.

2.

Yasukuni Shrine or Yasukuni Jinja, a Shinto Shrine established to honour those died in the wars. However, the convicted war criminals died in the World War II, 14 of whom are the highest class, were also listed to be “honoured”.

3.

Yanagiya Kensuke, the then Vice Minister of Foreign Affairs, stated that Deng had become a person above the clouds (absent-minded), and therefore cannot listen to others' opinions, in response to Deng's criticism of Japan's actions on Kōka Dormitory. Yanagiya resigned

4.

Asahi Shimbun, 25 August 1988.

5.

Asahi Shimbun, 9 September 1989.

6.

Asahi Shimbun, 24 August 2001.

7.

Asahi Shimbun, 21 July 2002.

8.

Asahi Shimbun, 21 November 2004.

9.

Japanese Communist Party and other left-wing parties frequently criticised his policy at the Diet, saying that his policy would ruin the country and bring unnecessary loss to Japanese people. See the conference proceeding of the diet.

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Acknowledgements

The author extends his gratitude to Prof. Yamada Mitsuru from Waseda University who provided valuable suggestions on the article. The author's appreciation also goes to Anzhi Jiang, Qiming Wu, Ruixi Wang, Prof. Bacon Paul Martyn, Prof. Okusako Hajime, Prof. Chester Proshan and the faculty of Graduate School of Social Sciences, Waseda University. Special thanks go to Chao Qin and Qin Rong, who provided financial support during the research process. Additionally, the author is grateful to other individuals and organizations that offered support for this research, including the journal editor and the two anonymous reviewers who provided valuable feedback.

Corresponding author

Qian Qin can be contacted at: qian.qin@unsw.edu.au

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