Reply #26: Japan suspends loans to China on strained ties

[54anickel]

http://news.ft.com/cms/s/c52cecd2-ba71-11da-980d-0000779e2340.html

Japan has suspended decisions on new yen loans to China, blaming its increasingly strained ties with its biggest trading partner and former wartime adversary.

The move, although largely symbolic, marks a fresh low in relations between Asia’s two biggest powers, which have been dogged by disputes over territory and natural resources.

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Shinzo Abe, chief cabinet secretary, said on Thursday that Tokyo would “put off making a decision on yen loans for this fiscal year to China ... because of various situations surrounding Sino-Japanese relations”.

However, Mr Abe, the frontrunner to succeed Mr Koizumi as prime minister in September, said the freeze signalled a delay, not a suspension, and that yen loans would continue with the aim of securing “future-oriented Sino-Japanese relations”.

Japan announced last year that it was winding down aid to China from 2008, the year of the Beijing Olympics. However, this is the first time that a reduction or freeze in loans has been explicitly linked with politics.

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