Summary of Prime Minister Nakasone’s Visit to China (Part 2) (Discussion with Premier Zhao Ziyang)

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Summary of Prime Minister Nakasone’s Visit to China (Part 2)

(Discussion with Premier Zhao Ziyang)

November 9, 1986

China Division, Ministry of Foreign Affairs

Following is the summary of the discussion between Prime Minister Nakasone and Premier Zhao Ziyang, which took place on 9 November, from 09:00 to 10:00 in the morning, in the Great Hall of the People.

1. (Beginning)

(At the beginning of the discussion, each expressed his happiness at seeing the other again for the first time since last year’s autumn United Nations General Assembly. Prime Minister Nakasone expressed thanks for the invitation to visit China and said that he was happy that the meeting was able to take place despite its being on a day of rest. In response, Premier Zhao remarked that it was a rare chance to exchange opinions on various issues of interest to both sides and that, although the time was short, it would be beneficial to mutual understanding as well as to friendship and trust between the peoples of both countries.)

(Prime Minister Nakasone’s Remarks)

(1) Japan and China are politically and economically in a mutually complimentary relationship. Cooperation towards trade expansion and balance are being made. Japan’s basic policy of cooperating now and in the future in China’s modernization remains unchanged.

(2) Amid changes in the global economy, the participating countries at the Tokyo Summit agreed on policy coordination and structural improvements. Discussion took place in particular on exchange rate coordination.

(3) If we consider Japan’s trade surplus, the US trade and fiscal deficits, Europe’s economic slump and unemployment, and such, our country’s 3.6 trillion yen domestic expansion policy is necessary and is now being discussed in the National Diet.

(4) We are now coordinating on the Japan-US exchange rate, as announced in the Miyazawa-Baker statement.

(5) Advancing a policy of economic economic is a difficult task for our country. Coal is a particular example of this.  We are at 16 million tons (current production) but are thinking towards making it just under 10 million tons. Domestically, we have an extremely large problem concerning the coal-producing areas.

(6) We are also making efforts for the sake of the trade balance between Japan and China. Japan, too, welcomes China’s recent establishing of investment regulations. The Ministry of International Trade and Industry and the Japanese business community have also been looking into means of increasing investment. From this point, I would like to cooperate in promoting economic exchange.

(Premier Zhao Ziyang’s Remarks)

(1) I have the impression that relations between our two countries are, on the whole, good. In the area of cooperation, they are showing relatively smooth progress. I am thankful for Prime Minister Nakasone’s contribution since assuming office. This implies the potential for new and deeper development. I am hoping for an expansion in imports from China and an increase in investment in China via Japan’s economic guidance and coordination.

(2) I would like to continue China’s policy of opening up and expand economic relations on the basis of the Four Principles. Thinking of new means of cooperation, I would further like to request your thoughts in the areas of financial cooperation, joint venture enterprises, and technical cooperation.

(3) In the area of trade problems, China’s excess of imports over exports is the most urgent problem. The situation has not improved much. The trade imbalance between Japan and China for the January – July period is 2.3 billion dollars and is likely to reach 4 trillion dollars for all of this year. We, too, will make efforts from this point to improve our product quality and trading system, but we would like the Japan side as well to make various improvements (for example, in import inspection). I think that there is potential power for increasing China’s exports.

(4) We have undertaken various matters on the basis of trade agreements between Japan and China, but in the coming year’s ministerial meetings I would like to discuss particular and concrete problems.

(5) In regard to export bases, I would also to consider such problems as joint ventures through yen loan packages. Concerning joint venture enterprises, I hope that Japanese enterprises further increase their investments in China. We have established new regulations, centered on the various opinions that Japanese enterprises have voiced to this point. Having done so, we would like to have Japanese corporations work actively. Progress, while visible these past two or three years, has been insufficient. In comparison to other foreign countries where Japanese enterprises have invested on account of the strong yen, it seems that there has been little in China. I would like to see the Japanese government also encourage and facilitate this.

(Prime Minister Nakasone responded: I would like to take this back with me and study it. However, competitiveness and stability of supply are important. I would like to work on improving the trade balance on the part of the government as a goal, but I would like the Chinese side, too, to make efforts in these areas.)

(6) There is still time but, following the second yen loan package that runs until 1990, I would like Japan to consider improvement and expansion in thinking of the third yen loan package.

(Prime Minister Nakasone’s Remarks)

(1) Concerning the third yen loan package, I would like to take it back to Japan and study it.

(2) Concerning the advance of Japanese enterprises into China, I thought that they would move into China due to the strong yen, but the result is that many have been going into Singapore, Thailand, and Malaysia. I think that it would be good if China studied this. From what I have heard, taxes in China are extremely high. Other than employment and income taxes, corporate taxes are also taken. Those earning two million yen a year are taxed at more than one million yen. It would be good to study this.

(3) We thank you for your various efforts in regard to Japanese schools in China. Our government and Japanese enterprises will do everything possible, but henceforth we would like cooperation from China from this point as well.