In the not so distant future, China probably will eclipse the United States as Japan's largest trading partner. That could happen before 2008 when Beijing hosts the Summer Olympics. Setting the pace of China's economic growth is investment in infrastructure, whose momentum is expected to increase in the runup to the Olympics.

China's emergence as an economic powerhouse is beyond question. Over the past decade and more, the Chinese economy has continued to expand at a torrid rate of about 10 percent a year, churning out a dazzling array of quality products from textiles to electronics at relatively low cost. Deservedly, China is nicknamed "the world's factory."

China projects a good image in Japanese minds. It was once seen as a menace, as many companies here, both large and small, were moving production there in pursuit of low-cost labor. That gave rise to the view that Japan's domestic industry would be "hollowed out" and lose its vitality. Now, however, China is seen as a customer: a giant market of 1.2 billion consumers with more money to spend than ever before.