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Japan to fix 2005/06 China yen loan amount -media

Written by: Staff

TOKYO, June 6 (Reuters) Japan has decided to fix the amount of its yen loans to China for the year ended last March, a decision that had been delayed because of strained ties between the two countries, Kyodo news agency reported today.

Japanese media had said a government panel would make the decision today and the cabinet would approve it soon.

A Foreign Ministry spokesman said he had no information on the reports.

Sino-Japanese ties have chilled since Prime Minister Junichiro Koizumi took office in 2001 and began annual visits to Tokyo's Yasukuni shrine, seen by critics as a symbol of Japan's past militarism. Some convicted war criminals are honoured there along with Japan's war dead.

The two countries have also been feuding over territorial rights and energy resources.

Media reports said Japan had decided to go ahead with the yen loan decision after Foreign Minister Taro Aso's meeting with Chinese Foreign Minister Li Zhaoxing in Qatar late last month -- the first foreign ministerial talks between the two countries in a year -- paved the way.

Japan has scaled back its low-interest loans to a booming China in recent years and has already decided to halt fresh yen loans to China by the time of the Beijing Olympics in 2008.

The Nihon Keizai financial daily said Tokyo would allocate about 75 billion yen (0 million) in loans to China for the year ended March 31, 2006 -- about 10 billion yen less than the previous year.

The government decides the size of its total aid budget before the start of each fiscal year in April but usually does not decide on the final breakdown until the end of the year.

Reuters SK VP0640

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