JAPAN — Japan's Diet has proposed to reduce economic assistance given to China. Economic aid is currently given in the form of grants and technical assistance under the Official development assistance (ODA) program. ODA contributes to the development of the economies of states harmed by Japan during World War II, an approach pursued not only as restitution but to improve regional stability and to secure scarce natural resource trade.
Assistance to mainland China will total $8.9bn this year, making Japan an unusual second to the United States in aid. This is down 30% from 1997, and is the fourth year-on-year decline as of 2003. Loans to China total $30bn to date. 
The ODA has been a key feature in Sino-Japanese economic and diplomatic relations. It was begun in the 1980s as China "opened up" to foreign investment. It is in part restitution for damage inflicted on China and atrocities such as the Rape of Nanking, seen in Chinese culture in much the same way as The Holocaust is in Western culture.
China is increasingly being seen as a competitor, however. Popular opinion in Japan is also increasingly resentful of what is perceived as anti-Japanese sentiment in China. Some feel that China should be grateful for ODA funds and that it is not. China has also been criticized by Japanese Foreign Minister Nobutaka Machimura for not being sufficiently cooperative with regards to environmental issues, which necessarily affect its eastern neighbor Japan. 
The People's Republic of China's Communist leaders have also been criticized for violating w:human rights and effecting a military build-up. Some argue that economic aid should be tied to compliance on relevant standards.
Through the ODA, Japan enjoys the support of many developing nations in UN votes. When China did not react favorably to Japan's intention to seek permanent UN Security Council membership, The Japan Times criticized the aid as a "complete waste".
Asia Times Online predicts "it is inevitable that funds flowing to China are set for further downsizing."
Total Japanese expenditures on ODA have reached $221bn distributed to 185 nations. Currently, the biggest recipient of Japan's ODA aid is India. Japan may soon be outspent in aid to China by France, Germany and Italy.

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Japan to reduce aid to China