Cable No. 2659, Ambassador Yoshida to the Foreign Minister, 'Okita – Gu Mu Meeting (A)'

Number (TA) RO99413 5258

Primary: Asia and China

Sent:  China, December 08, 1979, 12:15

Received: MOFA, December 08, 1979, 13:29

To: The Foreign Minister  
From: Ambassador Yoshida

Okita – Gu Mu Meeting (A)

Number 2659　Abbreviation Top Urgent

On the 7th, Minister Okita met with Vice-Premier Gu Mu for approximately one hour and ten minutes.  The meeting was as follows:

1. Minister Okita first said that China may not necessarily be satisfied with our decision regarding government loans to China, but our country did what we could within the various domestic and foreign circumstances. We would henceforth like to discuss using the first year's 50 billion yen as effectively as possible. Future problems include procedures, the allocation of the loan sum among the projects, the combining of the foreign currency from the yen loans and the local currency that the Chinese side must provide, and the basis for estimating the foreign currency.  Also, an overall plan for regional development, including railways and ports, will be needed. Furthermore, talks between Japanese specialists and the Chinese side on a division of responsibilities will also be necessary. On this point, former Japan National Railways (JNR) Chief Engineer Takiyama had also spoken of the need for an overall and, while his personal idea, Mr. Takiyama may prove useful to the overall plan. The JNR's president also recommends it. We think that now is the time when coal and railways are important for China.

2. In response, Vice-Premier Gu Mu, saying that he wanted to speak frankly, spoke as follows:  

(1) That our two countries reached agreement in such a short time following the proposal for this loan at the time I visited Japan in September is, I think, unprecedented. I would like to thank your country for its positive stance. We are satisfied with the 50 billion yen in fiscal year 1979 as a first step in cooperation in this matter. We also agree in principle to engage in talks each year from fiscal year 1980 according to project progress.

(2) This is a problem that I originally wanted to discuss with Prime Minister Ohira at the lunch on the 7^th but did not raise because Vice-Premier Li Xiannian touched on it. Prime Minister Ohira said to Premier Hua on the 6^th that the total of 1.5  - 1.6 billion dollars put forth for the six projects was based on the Chinese side's materials, but the amount that the Chinese side submitted was larger than that: over two billion dollars. What I would like you to understand is that the Chinese side's work being incomplete, the aforementioned figure is only an estimate. But I am not raising a problem concerning the total amount today. We will hold discussion hereafter as construction progresses, as we are united on cooperation until completion of the six projects.

3. Minister Okita explained in response that the Japanese side's thinking was that, because the Hengyang-Guangzhou Railway in its entirety was judged difficult due to domestic and foreign circumstances, the tentative consensus based on discussions within the government was that Japan should cooperate only on the technically difficult Dayaoshan Tunnel and put forth the figure of 1.5 billion dollars. The other side then said the following:

(1) I do not want to argue about concrete problems. So long as there is agreement for cooperation until the completion of the six projects, there is no problem in holding consultations every year from fiscal year 1980. Until the six projects are realized, we would like to consult on procedures and design and follow Japanese practices on the problems of foreign and domestic currency. If I were to explain one point, however, the Chinese side would like to carry out quickly and, if possible, to start construction at the same time on the six projects. Of course, depending on the state of progress, with some projects likely advancing rapidly and other slowly, we would then like to handle them scientifically according to the situation.

(2) One thing I would like to request of the Japanese side here is a simplification of the procedures for design, inspection, and such. We would like it so that procedures are not needlessly drawn out and progress slowed. That we reached agreement on six projects in little more than two months is a new breakthrough (in your country's aid decision process). We would like to open up a new breakthrough in implementation procedures as well. We would like our two sides to make efforts for that. We would like later to consider Mr. Takiyama for the railway problem.

(3) Our two countries have reached agreement on six projects and decided on using 50 billion yen. It is important to make a good start of it. In making a smooth start, facing the various problems that will surface in the course of their execution with the same friendly attitude, I am sure that we will resolve them without fail.

4. The other side then expressed the desire to conclude an exchange of notes as early as in the first part of January next year. In response, Minister Okita said that nothing would be better than if it were possible to do so within that period of time, but that he would like to have Bureau Director-General Yanai consult a bit more with the Chinese side.

5. In addition, after the meeting between Minister Okita and Vice-Premier Gu Mu ended, MITI International Trade Bureau Director-General Hanaoka raised in regard to the coal development plan the three plans from the time of the Inayama mission's October visit to China and the eight plans from the November meeting between Ambassador Yoshida and Minister of Coal Industry Xiao Han. On the 6^th, Premier Hua spoke of many regions with coal deposits. When asked regarding a priorities plan, Vice-Premier Gu Mu proposed a new plan to develop Jungar in Inner Mongolia (deposits of 30 billion tons, with 40 million to 50 million tons available for export to Japan in 1990). At the same time, he requested that the Japanese Government, if interested in that plan, make clear its attitude and contact the Ministry of Coal Industry.

(End)