The New Japan DRIVE FOR ASIAN ECONOMIC POWER

Press, Volume CI, Issue 29717, 10 January 1962, Page 10

The New Japan DRIVE FOR ASIAN ECONOMIC POWER

[3y a Special Correspondent of the “Financial Times”] (Reprinted by Arrangement]

London, December 15. The Japanese Prime Minister (Mr Hayato Ikeda) recenty completed a goodwill tour of the capitals of Pakistan, India, Burma and Thailand. This was a major land-mark on the road to greater economic co-operation in South and East Asia. Japan, which conquered much of South Asia during the last war under the pretext of establishing a "Greater Asian Co-prosperity Sphere,” is today returning to the scene of former conquests in a new role—as a leader and mentor of non-Communist Asia in the sphere of economic development. Mr Ikeda's tour strengthened the hope nursed in many Washington breasts that Japan and India might link up to present a strong democratic front in the face of China. Heavy Industry What is behind Japan’s growing interest in the Asian market? First, heavy industry has become an increasingly important element in the rapidly developing Japanese economic picture: from 1959 to 1960 the share of heavy and chemical industries went up from 50 per cent, to 55 per cent, of Japan’s total exports. As a result, Japan and North America are becoming less complementary and more competitive, so that in 1960 South and South-east Asia replaced North America as Japan’s chief export market. Another factor is Japan’s concern over the developing European economic bloc. Because of fear of exclusion from the growth of the major trading powers, Japan is eager to stake out its own claim in Asia to ensure future markets for its rapidly expanding trade potential. Yet another factor has been the Chinese rebuff to Japanese trade feelers. Unlike the U.S.S.R., China has preferred not to separate trade and politics, and has, for political reasons, remained resistant to Japanese attempts to improve trade relations without altering her pro-Western alignment. Asian Commitments Japan’s economic activities in Asia consist of war reparations payments, bilateral trade and investment agreements, and participation in regional development programmes. Under the last heading. Japan contributed 2,560,000 dollars through the Colombo Plan up to the end of last year, and is continuing to increase its payments. Japan has also trained more than 1200 persons under the United States “Third Country Training Programme.” Japan's independent efforts have been on a larger scale. In the fiscal year 1960 it allocated more than £l.4m. for economic co-operation, and ita commitments in this realm are continuing to increase. The recently established Overseas Economic Co-opera-tion Fund of £lom is designed to promote trade with countries of Asia.

Reparations payments, which exceeded £ 100 m by March, constitute the major part of Japan's contributions to other Asian countries, with the Philippines and Burma receiving the greater part. Against this background of Japan’s increasing involvement in Asian economic affairs. Mr Ikeda's tour was intended to strengthen Japan's position in the area by clarifying ita political posture, particularly in regard to China (for the benefit of neutralist India and Burma), to resolve outstanding reparations problems and offer further aid, and to acquaint Mr Ikeda himself with the area's problems.

Nuclear Testing In India. Mr Ikeda and Mr Nehru reaffirmed their opposition to nuclear teating and aired views on Chinese representation in the United

Nations. (Japan, following the United States, opposes the seating of Peking). India requested further loans and technical assistance in addition to the 80m dollars promised for the first two years of India's new Third Five-Year Plan (India’s Finance Minister had been disappointed by the level of the Japanese subscriptions to the "Aid-India Club”,. In Pakistan, where Mr Ikeda returned President Ayub Khan's courtesy call of last year, the Japanese Prime Minister promised to step up aid and investment. Only one week previously a £7m loan credit agreement, repayable in 15-20 years, was signed in Tokyo. In Burma, Mr Ikeda failed to resolve the reparations dispute. The Burmese have been demanding another £7lm. in war reparations over and above the £7lm. Japan originally agreed to extend in instalments between 1955 and 1956. Burma was the first war “victim” to sign a reparations pact with Japan, and it had been agreed that after the others had been finally negotiated the Burmese amount should be reviewed. When Indonesia received £Bom., the Philippines £l96m. and Vietnam £l4m the Burmese asked for another £7lm. for themselves —which they would invest in joint ventures, provided Japanese business firms put up yet another £7lm to match it Special Yen The only concrete problem solved by Mr Ikeda's trip was the issue of Thailand's demand for “special yen” compensation. During the war, Japan “borrowed” money from Thailand for military expenses, and Japan and Thailand have been disputing the final payment of £9.6 m. The Thais had been demanding outright cash payments in full, while Japan sought to offer credits or loans of lesser value. To the dismay of the Japanese Finance Ministry, Mr Ikeda agreed to pay the £9 6m in full in cash and goods. Japan's eagerness to eliminate the obstacles barring its path to further economic cooperation in Asia was reemphasised by Mr Ikeda after his return to Tokyo. He said that his Government would work in that direction “even if we have to borrow monev from foreign countries to do so.”