What the heck does ODA stand for?

Sunday, December 12 2004 @ 09:29 AM JST

Contributed by: Y.Yamamoto

We all knew the answer to this question when Japan started it some thirty years ago. But not anymore, as far as its China part is concerned, now that those fallacy artists such as Junichiro Koizumi, Hu Jintao, and the media both in China and Japan have started to give a variety of opportunistic definitions to this abbreviation.

On November 30 in Vientiane, the Laotian capital, Prime Minister Koizumi had an audience with his Chinese counterpart Wen Jiabao after his aides had repeatedly begged for the bilateral talks. Prior to the meeting between the two prime ministers, many people had voiced their more or less twisted opinions based on their own definitions of the three-letter word. On Nov. 28 Koizumi himself told the reporters in his retinue: "As China has achieved remarkable economic development, it may be time that it 'graduates' from Japan's official development assistance'. Here Koizumi was just reiterating his decision announced back home on Nov. 26. On Nov. 27 China's foreign minister Li Zhaoxing "shrugged off" the Japan's decision saying "The Chinese people only need to rely on their own intelligence, power, unity and determination to build a developed country."

Immediately after the bilateral talks, reporters from Japan were briefed that Koizumi had been frank enough, and perhaps courageous enough, with Wen to give the message that it's about time for him to hand out the graduation certificate to China, and that Wen had shown his understanding to the Koizumi's remark and even expressed his appreciation of the aid Japan has rendered to China for 25 years. But as usual, it turned out later that the government's spokesman was just lying. On the same day Koizumi had the sit-together with Wen, Chinese Foreign Ministry's spokeswoman Zhang Qiyue said at a regular press briefing that Japan's ODA still has a role to play. Certainly that was something Wen's pride prohibited him from telling his Japanese counterpart in person. And it was later learned that Wen, in fact, had expressed displeasure to the Koizumi's graduation remark and the indignant Wen had threatened that halting the China-directed ODA would "shatter the bilateral relations." (The Daily Yomiuri, Dec. 4).

Actually the Japan's PM should have cited the following facts, in particular, as his rationale for discontinuing the China-directed ODA, instead of the flattering graduation analogy:
1) Early this year, the Chinese government "dangled" US$ 50 million in grant aid to North Korea to secure Pyongyang's attendance at the second round of the six-way talks, according to the Asahi Shimbun. At that time the pro-Beijing daily reported this irregularity matter-of-factly and stopped short of pointing out that it cannot be tolerated for a recipient of grant aid to pass it on to someone else.
2) Since the beginning of 2004, Japan has lodged protest against China's unruly behavior in Japan's territorial waters or just outside of the disputed demarcation line for 34 times. Every time Japan lodged a taped protest, the Chinese government's taped answer was "Okino-torishima (Japan's southernmost island) is not an island. It's just a rock."
There are many other things Koizumi could have cited at the Vientiane meeting to justify his proposition to Wen. And each one of them constitutes a more convincing reason to cut off the aid than the graduation joke.

Then-prime minister Masayoshi Ohira started the disguised reparation 25 years ago. And by the end of fiscal 2003, Japan's aid to China had aggregated JPY 3.3 trillion, or US$ 31.4 billion at the current exchange rate, if you include the repayable loans of JPY 3.05 trillion. As I wrote in "Cut off ODA to China immediately" (TFP, Nov. 18), Japan should stop this overgenerosity to the ungrateful party right away and for good. I even suggest that Japan should be prepared for the worst case scenario in which it has to write off the outstanding loans totally because China would most probably counters the Japan's move by defaulting its outstanding obligation, on the grounds that ODA has been a disguised reparation from the beginning. We should learn our lessons from Japanese major banks' failure to keep their balance sheets in good shape. Their non-performing loans have snowballed just because of their wishful thinking about the future business perspective of their failing debtors and their tendency to cover up every bad news about themselves and their clients. It's about time that Japan, not China, graduated from ODA whatever the abbreviation signifies. Needless to say, the sooner, the better.

Unfortunately, though, the Japanese government and the media remain slow learners. The December 12 edition of the Daily Yomiuri carries a front-page story headlined: "Govt may end grant aid to China soon". If you ask how soon it may put an end to ODA to China, Koizumi's answer is "Perhaps in several years." To Koizumi, ODA directed to China is something that always allows opportunistic definitions. Now he's resorted to the standard definition of the words by the World Bank to suit himself after being scolded by Wen Jiabao in Vientiane. According to the guideline set forth, a little arbitrarily, by the World Bank, nations whose per-capita GDP is below US$ 1,400 are eligible for grant aid and those whose per-capita GDP falls somewhere between US$ 1,400 and $ 3,000 are still eligible for special loans. He goes on to say China's per capita GDP stood at US$ 1,090 as of 2003 and that makes China eligible for the time being. And conveniently enough, China's per capita GDP is expected to top US$ 1,400 in a few years, according to Koizumi.

But hold on, Mr. Koizumi. Why then didn't you tell Wen Jiabao that Japan is just adhering to the World Bank's guideline, instead of kowtowing to the China's prime minister with a forked-tongue with the diffident remark about graduation? Another question will be: How do you think Japan can afford to keep lending low-interest/long-term money and giving grants to these people when some economists are warning that Japan might be doomed to go belly up in 2010 due to a further decline in the overall savings rate caused by a drastic demographic change? The ratio of savings to disposable income in Japan was as high as 23% three decades ago. But it dipped to 6.2% by 2002. And these economists are saying it could further decline to zero percent or even sub-zero levels, if the government chooses to let the "2010 issue" drift unattended until the last minute as it often does. It cannot be totally ruled out that by that time, the Chinese will have taken over this country, although I wouldn't really recommend Japan as a good risk to Chinese investors. It's no time for visiting the Yasukuni Shrine, right? Or do you still expect us to keep paying the price for your morbid obsession with shrine visits and your vanity untiringly seeking the permanent seat at the UNSC?

Once again we are at a loss over this question: What the heck does ODA to China stand for?. But Gordon G. Chang, author of "The Coming Collapse of China" (Random House Inc., 2001), seems to know the answer. He exquisitely says: "Japan's ODA to China is just O-DI-OUS." He is damned right.

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