Japan readies cash as it seeks Asean backing on China

TOKYO - Japan will pledge billions of dollars in aid and loans to Southeast Asia on Saturday, the latest stage of a charm offensive to woo global public opinion in a dispute with China.

Tokyo is expected to announce fresh cash for members of the Association of Southeast Asian Nations (Asean) at a celebratory summit to mark 40 years of ties with the bloc.

The money will crown a year of courting by Prime Minister Shinzo Abe, who has visited all 10 countries in the grouping at least once since he came to power, always with one eye on wresting back influence in the region from China.

Asia's two largest economies are locked in a fractious spat over the sovereignty of a small chain of islands in the East China Sea, and Japan is keen to garner support for its position against what it says is an increasingly aggressive Beijing.

The case has taken on a greater urgency since China's declaration last month of an Air Defence Identification Zone (Adiz) over the East China Sea - including the contested archipelago.

Beijing said all aircraft entering the zone have to submit flight plans and obey orders issued by Chinese authorities, in an announcement that was widely criticised as inflammatory.

That came after more than 12 months of confrontations between Japanese and Chinese coastguards in the seas near the islands, as well as forays by military and paramilitary planes, and shows of strength by naval vessels.

Some fear the Adiz in the East China Sea is a forerunner to a similar zone in the South China Sea, which Beijing claims almost entirely.

Abe will announce 2 trillion yen (S$25.1 billion) in loans and grants to be paid over the next five years, reports have said, as well as an expansion of the existing Japan-Asean Integration Fund with a fresh 10 billion yen.

Japanese diplomats have pushed hard for the joint communique due at the end of the meeting to be a relatively forceful statement on the importance of freedom of navigation on the seas and in the air.

Although unlikely to make any explicit reference to China, any such statement could be viewed as an implicit criticism of its position.

Observers say Japan will find a reasonably willing audience among the four members of Asean who have their own territorial disputes with China - the Philippines, Vietnam, Malaysia and Brunei.

But all ten members of the bloc, which also includes Cambodia, Indonesia, Laos, Myanmar, Singapore and Thailand, have to tread a fine line to avoid irritating China, whose vast economy is vital to the region.

That point was underlined by Indonesian president Susilo Bambang Yudhoyono ahead of his meeting with Mr Abe on Friday, when he said disagreements in Northeast Asia are "pertinent" for the rest of the continent.

"In particular, it must be said that good relations between China and Japan are critical to the future of our region," he said Mr Abe's charm offensive has also been aimed at drumming up business for Japan's infrastructure-makers, with the prime minister keen to boost exports and help give the domestic economy a kick after years of lassitude.