(1) China's Position in Japan's ODA

In accordance with Japan's policy of extending cooperation as far as possible to support China's efforts to reform and open up its economy, Japan provides assistance to support the country's own efforts for economic development and improving the living conditions of its citizens, while taking into account the following factors.

China is the second largest recipient of Japan's bilateral aid (based on cumulative net disbursements up to 1998).

(2) Priority Areas for Japan's ODA

On the basis of studies and research concerning development conditions and tasks in China and its development plans, as well as policy dialogues between Japan and China, including the High-Level Mission on Economic and Technical Cooperation sent to China in March 1992 and subsequent policy consultations, Japan has given priority to assistance in the following areas.

(3) Matters for Consideration

• The "Japan-China Comprehensive Forum on Environmental Cooperation" which aims to tackle the already wideﾐranging cooperation between Japan and China in a comprehensive way through exchanges of views among government officials, private enterprise, local governments, academics and experts has been held twice since 1996. The forum has offered the opportunity for in depth debate on cooperation in the field of the environment.
• At the September 1997 Japanese-Chinese summit, an agreement was reached on the concept of "Japan-China Environmental Cooperation toward the 21st Century" built on two pillars of cooperation: the building of a Chinese domestic environmental information network; and a Japanese-Chinese environmental development model city initiative. The latter concept has been applied to three cities, Dalian, Chongqing and Gui Yang, as decided at a joint Japanese-Chinese expert committee meeting in April 1999. Proposals for specific points of implementation have been proposed by both sides, and are being duly considered in proceeding toward implementation.
• The implementation of cooperation according to the "Joint Announcement on Environmental Cooperation toward the 21st Century," as announced during President Jiang Zemin's visit to Japan in November 1998.
• Based on the "Joint Press Announcement on the Strengthening of Cooperation" for the agricultural sector, made during President Jiang Zemin's visit to Japan, the strengthening of cooperation, particularly in the field of sustainable agricultural technology.
• As part of President Jiang Zemin's visit, 28 projects worth a total of ¥390 billion were announced for the last two years (1999-2000) of the Fourth Yen Loan Package (1996-2000). Continuation of environmental, agricultural and inland development projects from the first three years (1996-1998) of the package is important. Upon completion of the Fourth Yen Loan Package, ODA loans will change from round-type (multi-year framework) loans to rolling-type long-list (multi-year candidacy) loans.

(4) The Situation Regarding the ODA Charter

Favorable progress continues in China in line with the ODA Charter principle of efforts to build a socialist market economy. Individual and private ownership is now allowed for with changes to the constitution in March 1999, which is an important aspect of socialist market economies. As the ODA charter stresses the importance of developing market economies, the continuation of such efforts is desirable. In the area of human rights, China has also exhibited a positive approach toward the signing of the International Covenant on Economic, Social, and Cultural Rights and the International Covenant on Civil and Political Rights and the release of the white paper on Human Rights. In August 1995, Japan in principle froze grant aid until it became clear that China had ceased nuclear testing, but with China's July 1996 declaration of a moratorium on nuclear testing and the signing of the Comprehensive Test Ban Treaty, Japan recommenced its grant aid to China in March 1997. There have been no signs of an increase in the military spending-to-GNP ratio.

(1) Major Economic Indicators

(2) Current Situation

With the goal of establishing a socialist market economy, China has been pursuing a policy of introducing a market economy and opening up the country. Around 1992, China experienced overheated economic growth. However, under a policy of restraint since the middle of 1994, economic growth has continued to be stable.

When the Asian currency crisis struck in 1997, thanks to its own controlled floating exchange rate system and restrictions on capital transactions, China was little affected directly. However, in 1998, the Chinese economy registered only 7.8% growth due to a drop in exports, foreign direct investment and the flood disasters of July and August of that year. China has repeatedly announced that it will not devalue the yuan.

(3) Tasks to Be Addressed

• Financial reforms must be pursued, massive bad loans must be dealt with, state enterprises must be reformed, and steps must be taken to deal with the unemployed and with latent redundancies.
• Efforts must be made to improve China's economic infrastructure and its agricultural base, which will serve as the basis for economic development.
• Steps must be taken to fight atmospheric and other environmental pollution, and to protect the natural environment.
• Efforts must be made to redress regional disparities between urban and rural areas.
• Attention must be paid to primary education and the development of human resources, including technical and managerial personnel.
• Legal systems to meet the needs of a market economy should be created, and the uniformity and transparency in enforcing these systems must be ensured.

(1) Japanese Assistance

(2) Assistance from DAC Countries

(3) ODA from International Organizations

(1) Indonesia's Position in Japan's ODA

Japan provides assistance to Indonesia, taking into account the following factors.

Japan announced in FY1998 that it would continue to provide assistance to Indonesia in its efforts to overcome economic difficulties and to provide support for measures for the socially disadvantaged and the unemployed. In July 1998, Japan announced a total of ¥187 billion in assistance to the Indonesian government (consisting of ¥150 billion in yen loans, which have been disbursed, and 50,000 tons of rice). Additionally, Japan provided 700,000 tons of rice from government stores under a food aid arrangement. Some $900 million in yen loans for the country's balance of payments and the socially disadvantaged was announced in October 1998 under the October 1998 New Miyazawa Initiative (of which $670 million, or ¥80.48 billion, have been disbursed). Loans from JEXIM of approximately $1.5 billion were also announced as public financing in addition to aid. Japan also assisted the general election held in June 1999.

Indonesia remains top recipient of Japan's bilateral aid (based on cumulative net disbursements up to 1998).

(2) Priority Areas for Japan's ODA

On the basis of studies and research concerning development conditions and tasks in Indonesia and its development plans, as well as policy dialogues between Japan and Indonesia, including the High-Level Mission on Economic and Technical Cooperation sent to Indonesia in February 1994 and subsequent policy dialogues, Japan has given priority to assistance in the following areas.

(3) Matters for Consideration

• Although Indonesia inaugurated a new government and has emerged from the most severe effects of the Asian financial crisis politically, socially and economically, the country's economy, in real terms, remains in a difficult situation, and there is need for Asian support policies for the socially disadvantaged to continue in 1999.
• Based on then-Prime Minister Hashimoto's proposal at the December 1997 Japan-ASEAN summit for Japan-ASEAN Programs for Comprehensive Human Resource Development, Japan will help develop the human resources needed in Indonesia to achieve sustainable economic development.
• Japan currently provides assistance to Indonesia in the agricultural field under third-phase "umbrella cooperation," which is directed at raising living standards for Indonesian farmers. Such cooperation is provided as part of Japan's efforts to integrate different forms of assistance.

(1) Major Economic Indicators

(2) Current Situation

The Asian financial crisis has had a serious effect on the Indonesian economy, with the country registering a negative growth rate of 13.7% and an inflation rate of 77.6% in 1998.

Presently, the exchange rate has stabilized, the inflation rate is dropping, investment is expanding, agriculture is on the upswing and there have been signs that the economy, in real terms, is on its way to recovery. While confidence in the Indonesian market has been somewhat restored, problems remain with excess bank debts and a continued lack of transparency in government and in society. In order to overcome the effects of the Asian economic crisis, the government must address the tasks of stabilizing consumer prices, of ensuring a stable supply of key foodstuffs and of restructuring the financial system; it must also proceed with policies for economic recovery that ensure the protection of the socially disadvantaged and secure economic stability. In its 1999 budget, the Indonesian government has set the following targets: an economic growth rate of 0%, an inflation rate of 17% and an exchange rate of 7,500 rupiah to the US dollar.

The major events on the political calendar, that are the general elections of 1999 and the election of a new president, were carried out smoothly. Achieving stable politics and public safety is vitally important in recovering confidence in the economy and achieving real economic recovery. The general election on June 7, 1999 were held in accordance with the election statutes.

(3) Tasks to Be Addressed

• Prudent macroeconomic policies must be continued, including steps to control inflation, to improve the balance of payments, and to properly manage cumulative foreign debt, and they must be applied appropriately to trade finance.
• Steps should be taken to protect the socially disadvantaged and the unemployed, to maintain and access to health and medical services, and to eliminate poverty and to rectify disparities in income, as well as disparities among different regions.
• Measures should be taken to deal with natural catastrophes such as forest fires, water shortages, earthquakes, volcanic eruptions and floods.
• Steps must be taken to achieve the necessary education level and foster technical personnel in order to respond to the growing sophistication of industry and the economy, and to promote employment.
• Measures should be taken to improve living conditions and combat pollution in urban areas, and to protect the natural environment.
• Economic and agricultural infrastructure should be provided as a basis for economic development.

(1) Japanese Assistance

(2) Assistance from DAC Countries

(3) ODA from International Organizations