Japan has decided to discontinue its 40-year official development assistance for China as need for the aid has receded with China's economy becoming the world's second largest, the Japanese government said Tuesday.
The decision indicates Japan wants to promote a new model of economic cooperation with China by ending the provision of ODA, with the two countries marking the 40th anniversary of a bilateral peace and friendship treaty on the same day.
Prime Minister Shinzo Abe will visit China this week for talks with President Xi Jinping and other leaders. It will mark the first time for a Japanese prime minister to travel to China primarily to hold formal bilateral talks since December 2011, when then Prime Minister Yoshihiko Noda visited.
As Japan and China have gotten out of the worst phase of their relations since 2012, they will newly set up a forum for the governments of Asia's two biggest economies to discuss cooperation to help build infrastructure in developing countries, Japanese sources said.
ODA may "no longer be necessary (for China) judging from its economic level," Japanese Foreign Minister Taro Kono said at a press conference.
Chief Cabinet Secretary Yoshihide Suga told reporters Japan's ODA for China that began in 1979 has "fulfilled its role" after the country achieved economic growth as well as development in technology.
Abe is expected to propose new economic cooperation between the two countries when meeting with Premier Li Keqiang on Friday, the sources said.
During his three-day visit starting Thursday, Abe is also likely to discuss with Xi a range of global and regional issues such as North Korea's nuclear program.
In Beijing, the government led by Xi has instructed members of the ruling Communist Party and state-run media to aggressively report that Japan's ODA has contributed to Chinese economic growth, a source close to the matter said Tuesday.
It is rare for China to emphasize the significance of Japan's ODA, as many Japanese lawmakers and government officials have been skeptical about whether economic aid is really necessary for its neighbor, with it having become a major world power.
Ahead of Abe's visit, China has apparently been trying to give the impression it is willing to further improve ties with Japan, as tensions with the United States have been escalating amid an intensifying tit-for-tat trade war.
Chinese Foreign Ministry spokeswoman Hua Chunying said at a press briefing in Beijing, "Japan's official financial cooperation with China has played an active role in China's reform and opening-up and economic construction."
Beijing is eager to develop the "new situation" with Tokyo through dialogue and economic cooperation, she added.
When starting to receive Japan's economic assistance in 1979, China was still a developing country. It was once the largest recipient of Japanese ODA.
Japan has provided China with ODA totaling 3.65 trillion yen ($32.4 billion) for the purposes of infrastructure building, humanitarian support and environmental protection, but it has ceded the position of the world's No. 2 economy to China.
Japan stopped giving low-interest loans -- a major part of its ODA for China -- in fiscal 2007, while it has continued to offer grant aid for relatively small projects including those to cope with air pollution and infectious disease.
Japan has been a major donor of ODA especially to nations in the Asia-Pacific region since the start of the initiative in 1954 and helped open China-Japan Friendship Hospital in Beijing in 1984, among other major projects under its ODA programs.
The Japanese government now plans to launch a new framework with China to study ways to cooperate in helping developing nations, the sources said.
For years, the two countries had been mired in a territorial row over the Senkaku Islands in the East China Sea. The group of uninhabited islets, which are called Diaoyu in China, are controlled by Japan but claimed by Beijing.
The dispute intensified after the Japanese government led by Noda, Abe's predecessor, decided to bring the Senkakus under state control in September 2012.
The situation, however, has drastically changed recently, as China has pledged to improve relations with its neighboring nations such as Japan, India and South Korea.