protection, human resources development, and poverty reduction in inland areas. While deciding which projects to provide assistance to, Japan carefully chooses projects that most effectively promote mutual understanding between China and Japan; and

(2) Regarding Yen loans to China, the system was shifted from a multi-year basis to a single-year basis. In order to decide the total amount of ODA to China including Yen loans, Japan has stopped considering the previous amount of assistance as given, and instead, adds up the amounts of assistance required by all the projects, while taking Japan's interests into consideration.

As a result, the total amount of Yen loans to China, which account for a large part of Japan's ODA to China, stood at approximately 96.7 billion yen (Exchange-of-Notes basis) in fiscal year 2003, decreasing by approximately 55% from the amount in fiscal year 2000. The projects to which Yen loans were provided in 2003 were limited to the fields of environment and human resources development. Each of these projects was chosen and carried out in such a way that benefited both China and Japan. For example, such projects included Japan-China exchange programs and related projects designed to enhance communications between Japanese and Chinese people living in local areas and also between Japanese and Chinese people working for academic and research institutions.

Under the ODA Charter and the Economic Cooperation Program for China, the Japanese government will continue to carefully devise projects and decide the ways of carrying them out so that the projects will benefit both countries. In this manner, Japan plans to provide China with ODA that benefits itself as well.

### 2. South Asia

Japan provided South Asia with bilateral ODA worth approximately 962.85 million dollars in 2003, which accounted for 16.0% of Japan's total bilateral ODA.

South Asia has one fifth of the world population and four least developed countries in its region and thus has the largest population of the poor in the world. The ODA Charter specifies that Japan should give due consideration to the large number of poor people in South Asia. In addition to the problems related to poverty and population, the region has such other serious problems as the low diffusion rate of primary education, insufficient health and medical systems, and spread of infectious diseases. South Asia is a region that has to solve these very difficult problems before attaining MDGs (Millennium Development Goals). The only other region that has problems as large as South Asia's is Africa. The international community including Japan considers South Asia as very important in terms of nonproliferation efforts and the "war against terrorism" undertaken since the terrorist attacks on September 11, 2001.

Japan will continue to put a high priority on assistance to solve problems related to poverty in South Asia. Japan will also support South Asia's efforts for further stability and development by assisting countries in the region to liberalize their economies and cooperate with each other to improve their respective economies.

In order to reduce poverty and sustain the livelihood of the poor, Japan has given grant assistance and technical cooperation in a synergistic manner to least developed countries, namely, Bangladesh, Bhutan, Nepal, and Maldives. Such assistance and cooperation have been offered mainly in the fields of agriculture, housing, health and medical care, and

Chart II -31 Japan's ODA Disbursements to South Asia

Rank	Country or region	Grant	Total	Yen loans, etc.	Total
Grant aid	Technical cooperation
1	India	2.31	18.82	21.13	304.66	325.79
2	Pakistan	54.76	19.70	74.47	191.75	266.22
3	Sri Lanka	19.46	27.03	46.49	125.76	172.26
4	Bangladesh	94.63	33.01	127.64	-12.38	115.27
5	Nepal	38.48	18.31	56.79	3.82	60.61
6	Bhutan	9.01	7.20	16.21	-	16.21
7	Maldives	4.14	2.09	6.24	-	6.24
Others	-	0.26	0.26	-	0.26
South Asia Total	222.80	126.43	349.24	613.62	962.85

Note: (1) The geographic division was made based on the classification by the Foreign Ministry. (2) As the figures in the table are rounded off, they do not necessarily add up to the totals.