In response to recent Chinese naval operations near Japanese territorial waters, the ruling Liberal Democratic Party on Wednesday decided not to extend around 17.2 billion yen in special loans to China, LDP officials said.
The loan plan was outlined to the LDP on Aug. 2 and formal endorsement and signing of the agreement with China had been expected later this month.
A Tuesday report outlining repeated incursions by Chinese vessels into Japanese exclusive economic waters, however, led to strong opposition to the loan plan during an LDP meeting Wednesday to discuss the issue.
"If we extend the loans now, it will send the wrong message," one participant was quoted as saying.
Another said loans should be contingent on a Chinese pledge to restrain its military operations near Japan.
Given the strong opposition, Yasuhisa Shiozaki, head of the LDP Foreign Affairs Division, proposed that the LDP discuss the plan again after Foreign Minister Yohei Kono conveys the LDP position to China during his Aug. 28-31 visit.
Japan has detected 17 incursions into its exclusive economic waters by Chinese research vessels or warships this year, according to a Foreign Ministry report submitted Tuesday to the LDP.
The low-interest yen loans had been earmarked for a Beijing railway project and an airport terminal expansion plan in Xi'an, Shaanxi Province, under a program designed to help countries hit by the 1997 Asian financial crisis.