Japan to review aid for booming China
By Kyung Lah, CNN
March 4, 2011 -- Updated 0831 GMT (1631 HKT)
Shoppers walk through a busy retail street in Beijing as China overtakes Japan in terms of GDP.
China overtook Japan as the world's second largest economy last year
Japan has the developed world's highest debt to gross-domestic-product ratio
The nation's ruling party has been under increasing pressure to cut the country's spending deficit
Tokyo (CNN) -- Japan will review and possibly cut financial aid to China, in light of Beijing's growing economic power, the nation's foreign ministry said Friday.
"With China overtaking Japan in terms of gross domestic product, it is completely inconceivable for Japan, which has been outranked, to increase its ODA (official development assistance)," said Japan's foreign minister, Seiji Maehara, on the floor of the parliament Friday.
Last year, China overtook Japan as the world's second largest economy.
Maehara also said he has instructed the ministry to conduct an official review of Japan's ODA policy for other countries, in light of Japan's economic challenges.
The Democratic Party of Japan, the nation's ruling party, has been under increasing pressure to cut the country's spending deficit.
Japan has the developed world's highest debt to gross-domestic-product ratio, nearing 200%. GDP is a broad measure of a nation's economic output.
The government is also struggling with a dwindling worker and tax base, as Japan ages faster than any other country in the world, because of its long lifespan and low birth rate.
Tokyo started extending aid to China in 1979, but stopped fresh loans in 2007. Japanese loans to China during the 2008 fiscal year totaled 3.32 trillion yen or about US $40.5 billion, according to Tokyo.