Countries in the world certainly cannot always meet the needs of their own economies; there are countries whose GDP income is still below average, so they usually need foreign assistance from developed countries. Foreign aid is an economic resource for countries that are in crisis or are affected by shocks in the economy. This foreign assistance is usually in the form of providing funds by the donor country, whether the donor country gives it in a grant or there are other interests in it. However, it is not only in the form of funds; usually it can also be in the form of cooperation between the two countries in solving problems that occur, be it technology transfer or idea transfer.
There is an organization that oversees foreign aid issues known as the Organization for Economic Cooperation and Development (OECD), where this organization usually provides assistance in the form of focusing on the development of a country, which is also often known as Development Assistance. This is usually in the form of assistance provided by the government, state, or aid agency to support economic, environmental, and socio-political development efforts from peripheral countries or intrusive countries. The OECD now has 35 member countries participating in it.
Official Development Assistance (ODA)
Japan, or a country often referred to as the Land of the Rising Sun, is one of the members of the OECD that is active in providing assistance to developing countries. Japan provides its foreign assistance using ODA (Official Development Assistance), which is also the foreign policy of Japan, which was first started and given in 1954 to the Asian continent, especially the Southeast Asian region, in the form of compensation for damage caused by war and focused on economic reparation cooperation. The forms of ODA assistance to developing countries include loans, donation funds, and technical cooperation.
In 1979, Japanese Prime Minister Orihara proposed that he would give Japan’s ODA to China in the form of yen loans aimed at seven infrastructure development projects. After that, ODA assistance continued to be given to China, which increased every year until China became the first recipient of ODA assistance from other Asian countries. Japan gave ODA to China not for no reason, but the two countries have a long historical relationship, and also as an expression of regret for Japan’s actions towards China in the past. But is it just because it has a long history and to compensate for what Japan has done to China, or is it just another syndicate in the aid fund, such as for Japan’s national interests or to strengthen trade relations between the two countries and to expand the Japanese economic wing?
Objectives of Official Development Assistance (ODA) Japan
Japan is one of the member countries of the Organization for Economic Cooperation and Development (OECD), which it joined in 1964, becoming the first country in the Asia-Pacific region to join the organization for foreign assistance, or OECD. Japan is active in providing its foreign assistance, which is commonly known as the Official Development Assistance (ODA). When ODA started in 1958, Japan provided yen loans (ODA loans) to India. So this is proof and the starting point of serious Japanese economic cooperation.
Japan’s ODA assistance was then also given to China starting in 1979 by providing yen loans to China for seven infrastructure development projects. Furthermore, Japan again provided its foreign assistance to China in March 1984 in the form of the same thing as the previous year, namely the yen loan to 16 projects similar to the previous one, namely infrastructure. The value of Japan’s ODA to China continued to increase to 820 million yen aimed at the same 42 projects, and the two countries added the objects of regional development cooperation, agriculture, and chemical materials or tools.
This ODA assistance continues to be disbursed by Japan to China, which continues to increase; in 1996-1998, Japan provided assistance of 580 million yen. In 1999-2000 ODA had declined due to the monetary crisis that occurred at that time, and ODA funds in that year were only 390 million yen. Then in the following years, ODA assistance increased again and continued to increase to China, amounting to $686.13 billion in 2001, $828.71 billion in 2002, $759.72 billion in 2003, and $964.69 billion in 2004. So that the consequences of the increasing ODA assistance to China make China the country with the largest recipient of ODA assistance in the East Asian region.
This large and ever-increasing ODA assistance is not just an aid, but it is a regret from Japan towards China for what they have done in the past. The two countries, Japan and China, have a long history, so it is appropriate for Japan to provide assistance to its neighboring country. Not only that, this ODA assistance then makes the relationship between the two countries, Japan and China, strong in terms of economy, trade, and investment from these two countries, which then makes for harmonization in trade relations between these two countries.
ODA has become a significant element of Japan’s policy towards China. Japan is trying to create a solid basis of Japan-China economic interdependency by using this ODA, half of which is invested in the development of China’s economic infrastructure, which is then expected to be able to contribute to China’s aim of becoming a responsible power in the international world. Japan also sees that China has the potential for Japan to expand its economic wings. It can be seen that with ODA as the main foundation until now, trade relations between the two countries remain harmonious.
The Impact of Japan’s Official Development Assistance (ODA)
The impact of ODA can be seen in the trade relationship between Japan and China, where in 2008, trade between China and Japan reached $266.4 billion, an increase of 12.5 percent compared to 2007, making the two countries each other’s main trading partners. Then this also has an impact on Japanese investment in China. Japan’s ODA assistance, which is focused on the development of infrastructure and industrial sectors in China, creates a conducive environment for Japanese companies to invest and operate in China. And finally, increased economic cooperation: economic cooperation between the two countries continues to increase and includes many sectors such as technology and service manufacturing.
This ODA is the foundation that then makes the trade relationship between Japan and China stronger. By looking at Japan’s ODA to China, it means that by using Japan’s ODA foreign assistance policy to China, it makes a solid foundation of economic dependence between the two countries so as to create a strong economic and trade relationship between Japan and China, which was reported in the Ministry of Foreign Affairs of Japan that “Relations with China are one of the most important bilateral relations between Japan and the two countries have close economic relations, as well as exchanges between peoples and cultures, and will continue to work together to build constructive and stable relations.” This can then be proven by trade and investment data between the two countries, namely:
– Trade with China (2021)
· Exports to China: $206.2 billion
· Imports From China: $165.9 billion
– Direct Investment (2020)
· Direct Investment from China to Japan: $0.5 billion (inflows, 2020)
· Direct Investment from Japan to China: $3.4 billion (inflows, 2020).
Although the two countries carry out economic cooperation, it is not a reference to measure the harmony of the two countries. In fact, until now these two countries are still catching up with each other and competing in the economic field, where the two countries are currently in second and third place in the world’s largest economic growth. However, with ODA, there is a solid foundation between the two countries, which, even though they compete in economic growth, their trade relations are still strong on the basis of the foundation made by Japan using ODA as a tool.
