## ● Relations with China

Since 1979, Japan’s assistance to China has helped the infrastructure development in coastal areas, environmental measures, improvement in the basic human needs sectors including health and medical care, and human resource development, and has contributed to the steady development of the Chinese economy. Also, Japan’s assistance has played a significant role in promoting and sustaining China’s reform and opening policy. Most of the assistance was provided in the form of loan aid. The assistance can be evaluated as having supported the development of economic relations between Japan and China as well as having functioned as one of the main pillars for the multilayered Japan-China relationship. Regarding this point, the representatives of China, including at the summit-level, have expressed their gratitude on many occasions. In light of China’s recent remarkable economic growth, Japan and China recognized that Japan’s ODA loans for China would come to a harmonious end by the 2008 Beijing Olympics. Therefore, the new provision of loan aid was halted with the six Exchanges of Notes in December 2007.

Yet, the people of Japan and China face many common challenges to tackle, including global issues such as environmental problems and infectious diseases that may affect Japan directly. During President Hu Jintao’s official visit to Japan in May 2008, in a “Joint

## I ndonesia: Lumut Balai Geothermal Power Plant Project

When greenhouse gas emissions from sources like the decrease of forests and the destruction of peat lands are added in, as of 2005 Indonesia had become the world's fourth largest emitter of greenhouse gases after China, the United States, and Brazil (Note 31). Owing to factors like the increase in energy demand accompanying economic growth, consumption of coal has risen and emissions of greenhouse gases from the energy sector are growing larger. For this reason, there is a pressing need to give shape to climate change countermeasures such as the development of renewable energy with a view toward the reduction of greenhouse gases.

In the aim of improving the stability of the electricity Statement between the Government of Japan and the Government of the People's Republic of China regarding the Comprehensive Promotion of a Mutually Beneficial Relationship Based on Common Strategic Interests", the leaders of both countries confirmed that cooperation will be undertaken mainly in the areas of energy and the environment, while a joint declaration was issued relating to climate change. Moreover, increasing the mutual understanding between the people of Japan and China is an important issue from the perspective of facilitating the sound development of Japan–China relations. In light of this situation, grant aid is currently being implemented with its focus narrowed on: (1) areas conducive to resolving common challenges faced by the people of Japan and China such as the environment and infectious diseases, and (2) areas conducive to promoting mutual understanding and increasing exchanges between Japan and China. Also, in terms of technical cooperation, Japan is particularly focusing on projects aiming for the transition to a market economy, observance of international rules, promotion of good governance, and energy conservation. Exchanges of people can serve as an important means for transmitting Japanese values and culture to China. Based on the conditions surrounding bilateral relations, the cooperation will be conducted with appropriate deliberation from a comprehensive and strategic viewpoint.

supply on the island of Sumatra, Indonesia, Japan promotes the construction of the Lumut Balai Geothermal Power Plant through an ODA loan of approximately ¥27 billion. The objectives are to improve civil life, for the sake of economic development through improvements in the investment climate, and to reduce the burden on the global environment by promoting the development of renewable energy. As a direct outcome from the implementation of this project, it is forecasted that reductions in the emissions of carbon dioxide will reach 590,385 tons per year two years after the completion of the project. As such, the expectation is that it will improve the stability of the electricity supply in Indonesia and cut down greenhouse gases.