Luncheon Speaking Engagement Organised by the Japan Society The Atrium Room, Island Shangri-La Hotel 12:30 pm, 11 Decem

1. Luncheon Speaking EngagementOrganised by the Japan SocietyThe Atrium Room, Island Shangri-La Hotel 12:30 pm, 11 December 2006 Japan and China -- A mutually beneficial relationship based on common strategic interests by Shigekazu SATO Consul-General and Ambassador of Japan

2. 1. Japan-China relations since 1972 • Normalisation of diplomatic ties (1972) • Japan’s full support of China’s reform and opening policy (1978) - ODA (1979) 3 trillion yen (HK$ 200 billion) - soft loans • Close ties since the 1980s - China’s willingness to learn from Japan - favorable sentiment towards each other

3. China in the 1990s - rapid economic growth - increase of political influence - Jiang Zeming’s state visit to Japan (1998) worsened Japanese perceptions - many other incidents affecting Japanese perceptions = “China’s rise”

4. Japan in the 1990s - long recession Japanese less confident decline of Japanese model of development - more assertive diplomacy in the political arena participation in UN peace-keeping operations seeking permanent membership of the UN Security Council

5. Yasukuni shrine China:visits to the shrine are to worship class A war criminals - revival of militarism - glorification of the invasion Japan:divided opinions - majority think that visits are to pray for the war dead • No mutual visits between the two leaders for 5 years

6. People’s perception of each other • Japanese perception of China: “Do you like China?”

7. Chinese perception of Japan（Unofficial survey in 2005) Do you like Japan? Yes 15.8% No 74.5% Do you know that Japan has extended economic assistance? Yes 29% No 71%

8. Exports Imports US$ billion 1999 2000 2001 2002 2003 2004 2005 Balance • 2. Current Japan-China Relations • (1) Trade between Japan and China • Total amount of Japan’s trade with China, including Hong Kong, reached US$227 billion in 2005, surpassing Japan-US trade (US$199 billion) for the second year Japan-China trade figures (1999-2005)

9. Share of trade with China (2001-2005) Exports Imports

10. US$ billion 2000 2001 2002 2003 2004 2005 • (2) Japanese investment in China • Japan’s FDI in China amounted to US$ 6.57 billion in 2005, an increase of 12% from 2004 • Japan is China’s second largest investor, exceeded only by Hong Kong (excluding investments from tax havens) • China attracted 14.4% of Japan’s total outgoing FDI in 2005

11. Million people New measure introduced to make it easier for citizens from all areas of the PRC to visit Japan as part of a group tour 1996 1998 2000 2002 2004 2005 • (3) People-to-people exchanges • In 2005, over 4 million Chinese and Japanese visited each other’s countries, an increase of 50% over 2001 • Over 110,000 Japanese live in mainland China and Japanese companies employ 10 million Chinese people

12. 3. Recent top-level meetings between Japan and China • Prime Minister Abe’s visit to China, meeting with Chinese leaders (Oct 8) Survey (Oct 14, 15) • Do you appreciate PM Abe’s summit meeting with Chinese leaders? Yes 82% No 11% • Do you think Japan’s relations with China will improve? Yes 63% No 29%

13. Japan-China Joint Press Statement • Both leaders shared the view that • it is the solemn responsibility of both countries to contribute constructively to the peace, stability and development of Asia • the two countries should strive to build a mutually beneficial relationship based on common strategic interests • Both sides expressed the view that they should hold talks more frequently

14. Japan appreciated China’s peaceful development, which has also provided Japan and the international community with a great opportunity • China appreciated the fact that Japan has consistently followed, and will continue to follow, the path of a peaceful countryfor more than 60 yrs since World War Two

15. (2)Bilateral meetings on the fringes of the APEC summit in Hanoi (Nov 18) • The two leaders - reaffirmed their commitment to building a mutually beneficial relationship based on common strategic interests - exchanged views on concrete measures to realise this commitment • The foreign ministers shared views on arrangements to initiate a joint study of history by Japanese and Chinese scholars

16. 4. Building a mutually beneficial relationship based on common strategic interests • Efforts and co-operation in several different fields - Energy-saving and environmental protection - Protection of intellectual property rights - Ministerial dialogues & consultations - Youth exchange –“Japan-China 21st Century Exchange Program” - Japan-China Exchange Year in culture and sports

17. Japan-China 21st Century Exchange Program To foster mutual trust between people, especially between the youth of Japan and of China, through direct experience of life and exchanges in the other country. The Japan Foundation Japan-China Friendship Center “Japan-China 21st Century Fund ”(10 billion yen) “Japan-China Short-term Exchange Program for High School Students” （500 million yen） “Medium and Long-term Invitation Program” （3 weeks -１year） “Short-term Exchange Program” (around 10 days) Invites 1,100 Chinese high school students to Japan, while sending Japanese high school students to China in order to promote youth exchanges between the two countries (e.g. one-day homestay) . Invites 100 Chinese high-schoolstudents annually（including students who are studying or have studied Japanese） and provides opportunities to experience Japanese society through school life, homestays and other activities with Japanese high school students. linkage “Exchange Spots” for Cultural Experience in China Japan-China Exchange Network Support and foster people who are in charge of Japan-China exchanges by establishing networks among relevant parties both in Japan and China through information-sharing and support for projects, etc. Establish and manage “Exchange Spots”, places for Japan-China people-to-people exchanges in facilities where Chinese youth gather, <Achievement> Almost 850 Chinese students have visited Japan under the program so far.

18. “The Japan-China Exchange Year in Culture and Sports 2007” Opinion polls (both in Japan and China) Need to transmit a fair image of “New Japan” to China’s younger generations ●Japanese ▼90% get information about China mainly from the mass media. ▼40% have a “very bad” or “not good” image of China. ●Chinese ▼ 90% get information about Japan mainly from the mass media. ▼60% have a “very bad” or ”not good” image of Japan. Oct 2006 Japan-China Summit Meeting ●agreed to develop exchanges between the two countries by holding “The Japan-China Exchange Year of Culture and Sports” in 2007 Establishing the action committee for “The Japan-China Exchange Year of Culture and Sports 2007” Upcoming Tasks ●Choosing the logo ●Publicity, etc. 　●Fundraising 　●Planning and operating the project 　●Deciding on projects to be subsidised

19. Co-operation in international and regional issues - issues related to North Korea - promoting the process of East Asian integration - UN reform

20. Hong Kong’s constructive role and advantages • International financial, trade and logistics centre • Free and open economy • Free press, rule of law, open to different ideas • Positive attitude towards Japan

21. 20 Nov 2006 South China Morning Post (A2)

22. 4 Dec 2006 South China Morning Post (A14)