China, Japan Pledge Economic Cooperation

The Associated Press
Sunday, December 2, 2007; 6:38 AM

BEIJING -- China and Japan amicably wrapped up their first high-level trade and economic talks on Sunday by pledging greater overall cooperation _ but left the touchy issue of gas exploration in the East China Sea unresolved.

Chinese Premier Wen Jiabao hailed the two-day meeting as "successful," and the two sides issued a joint statement promising to strengthen efforts to form a regional free-trade zone, promote energy efficiency and improve protection of intellectual property rights.

They also agreed to participate in an anti-global warming framework to replace the Kyoto Protocol, and cooperate on measures to combat money laundering, terrorism financing and smuggling.

"It's clear China and Japanese relations have taken another step forward, especially in the areas of trade and commerce," Wen told Japanese Foreign Minister Masahiko Komura and four other Cabinet officials at the Zhongnanhai compound, where Chinese leaders live and work.

Komura, who also met with State Councilor Tang Jiaxuan on Sunday, was scheduled to meet Chinese President Hu Jintao on Monday.

The discussions, modeled after similar dialogues China holds with the United States and the European Union, were aimed at strengthening ties between the two longtime rivals for regional influence. They bring together the largest number of Cabinet officials from the two countries since they opened diplomatic ties 35 years ago.

Although the meetings mark a new willingness to move beyond divisive disputes that have chilled relations over the past decade, there were still no breakthroughs in Japan's chief issue _ China's exploitation of a gas field that straddles a contested part of the East China Sea.

So far, they have held 11 unsuccessful rounds of talks on the dispute.

Claims to the gas deposits came to the fore in 2005 after Chinese crews began drilling at a field known in Chinese as Chunxiao. Though the drill site is not in a disputed area, the field straddles the contested demarcation line and Japan worries that oil reserves in the area might be sucked dry.

China has rejected Japan's proposal to jointly develop the fields, which both nations hope to exploit in their drive to feed their fuel-hungry economies.

No significant progress was made in talks between foreign ministers on Saturday, so Komura mentioned the issue again in his meeting with Wen, Japanese Foreign Ministry spokesman Mitsuo Sakaba said.

"Strong political leadership from the Chinese side is needed to make a breakthrough," Sakaba said. "Without concrete instructions from the top leaders ... we cannot make a breakthrough."

The joint statement also urged a faster appreciation of China's currency, the yuan or renminbi, a move that many of Beijing's trading partners would like to see.

"While Japan welcomes measures regarding the more flexible appreciation of the rembinbi, it calls on China to make efforts toward allowing a faster rise," the statement said.

Two modest agreements were struck during the talks. One was a $420 million Japanese loan to China to fund six environmental projects, and the other a treaty to allow the countries' police and prosecutors to work directly on criminal extradition.

Economic ties have begun to sour as Japanese companies complain that China is blocking acquisitions of Chinese firms. While China, including Hong Kong is Japan's No. 1 trade partner, Japanese investment in China fell 30 percent last year, to $4.6 billion, from the year previous, according to the Japanese Foreign Ministry.

© 2007 The Associated Press