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    Japan
     Mar 13, 2007
Page 2 of 3
Japan, China gear up for gas talks
By Hisane Masaki

be jointly developed. Japan has proposed the joint development of four gas fields - Chunxiao/Shirakaba, Duanqiao/Kusunoki, Tianwaitian/Kashi and Longjing/Asunaro. China has rejected the Japanese proposal and made counter-proposals that call for the joint development of two areas - one around Longjing/Asunaro and the other around the Senkaku Islands. China wants to limit any possible joint development to the Japanese side of the median line. Japan's Nikkei business daily reported recently that Tokyo



has proposed to China joint development of a wider area around the disputed gas fields than it proposed earlier, including on the Japanese side of the median line, in a bid to break the deadlock in negotiations. "Japan seeks to effectively shelve the contentious issue of setting a demarcation line," the Nikkei said. The paper said Japanese Administrative Vice Foreign Minister Shotaro Yachi made the proposal during a visit to Beijing in late January and that Japan hoped for a deal in time for Premier Wen's visit to Tokyo in mid-April.

But Akira Amari, the minister of economy, trade and industry, immediately denied the report, saying: "It is not a fact that such a proposal was made at the vice-ministerial talks in January." Amari said, however, that the top Chinese leadership is saying progress may be achieved in the next bureau-chief-level talks on the gas dispute and that he also has "high expectations".

In their meeting in mid-February, Abe told Li, "I would like to resolve the resources-development issue as soon as possible so that the East China Sea will be a place of peace, cooperation and friendship." Li replied that he wanted the two governments to discuss issues "seriously and with patience" and then proposed resuming bureau-chief-level talks as early as March. Japan agreed to this proposal.

The agreement to hold the next meeting, the seventh round of high-level talks, apparently reflects a strong desire on both sides to sustain improved bilateral relations

China is now Japan's most important trading partner, along with the United States. Japan also needs to cooperate closely to resolve the issue of North Korea's nuclear and missile programs, which currently pose the biggest security threat to Japan. Furthermore, Japan wants to see China exert its influence with the reclusive Stalinist state to address the issue of that country's past abductions of Japanese citizens, the biggest sticking point between Tokyo and Pyongyang.

China, for its part, also has good reasons to push for a further improvement in bilateral ties. Despite its rapid ascendance as an economic power, China, the world's most populous developing country, still badly needs Japanese capital and technologies.

To be sure, the agreement to resume high-level gas talks should be welcome news. The two countries will get nowhere if they do not talk anyway. But expectations of an early breakthrough may be betrayed. It is becoming increasingly difficult for either government to compromise on the issue, for political as well as economic reasons.

Abe is a staunchly conservative politician. He is widely known for his nationalist views on history and hawkish stance toward countries such as China, which is rapidly building up and modernizing its military and is widely viewed in Japan as the biggest potential security threat in the medium and long terms. There is growing discontent among conservatives, however, that Abe has changed his coat since taking office. In an attempt to repair damaged relations with China, Abe has either toned down or even reversed his previous rhetoric, at least in public.

Japan has strongly demanded that China stop its development of the gas fields in question until the two countries strike a deal on the dispute, a demand ignored by Beijing. Many lawmakers of Abe's ruling Liberal Democratic Party (LDP) doubt Beijing's seriousness about seeking a negotiated settlement to the gas issue. In fact, it was not until mid-February that Beijing agreed to repeated Japanese requests for a resumption of high-level talks on the gas issue.

Many LDP politicians believe that a weak-kneed stance could hurt Japan's national interests. Shoichi Nakagawa, the hawkish LDP policy chief, recently criticized the Japanese government for what he sees as a too-weak stance and called for it to let Teikoku Oil Co, a unit of Inpex Holdings, the nation's largest oil and gas explorer, to start test-drilling in waters near the gas fields in question as a countermeasure against China.

In the summer of 2005, the Japanese government granted Teikoku Oil the right to conduct a test-drilling in the areas near the disputed gas fields, although no such test-drilling has been actually conducted yet for fears of aggravating tensions - and possibly triggering an armed confrontation - with China. Inpex Holdings was born last April as a joint holding company of Inpex Corp and Teikoku Oil, Japan's No 1 and No 3 oil developers, to integrate their operations.

In 2005, the Japanese government decided to build the country's first ship specially designed to survey offshore oil deposits. Also, in a move aimed at providing a legal basis for protecting Japan's test-drilling activities in the East China Sea, the ruling LDP has been pressing for the enactment of a bill since early last year to

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