The Japanese newspaper Yomiuri Shimbun reported over the weekend that Japan is set to stop offering any new grant aid to China in 2006, phasing out all such aid as existing programmes run their course.
The report also said Japan is considering cutting down the number of Official Development Assistance (ODA) loans over the next few years, eventually discontinuing low-interest yen loans - one portion of the ODA programme - altogether.
But Japanese Embassy played down the report.
"As far as I know, no official decision has been made by the Japanese Government concerning the ODA programme to China," said Japanese Embassy spokesman Ide Keiji （井出敬二）.
He said no decisions will be made without careful consideration.
The spokesman said both China and Japan can work together to deal with the aid issue.
"ODA loans are an example of successful co-operation between Japan and China," said Keiji. "I wish the two countries will continue their co-operation - in whatever form - for the prosperity of both nations."
Zhang Jifeng, a researcher with the Institute of Japanese Studies under the Chinese Academy of Social Sciences, yesterday said he understands ODA loans will come to an end some day.
He said the ODA programmes have been positive since they were implemented in 1979.
"On the one hand, we are grateful to Japan's aid - it meant a whole lot to China in the 1980s when the country was thirsty for foreign capital," Zhang said. "On the other hand, implementation of the aid projects has also benefited Japan, including its enterprises."
Japan's ODA for China include long-term yen loans, free grants and technical assistance.
Most of the aid has come in the form of yen loans, Zhang said.
The grants totalled about 5.2 billion yen (US$50.78 million) in fiscal 2003, while yen loans to China totalled about 96.7 billion yen (US$94.43 million), according to Japanese media reports.
China's Ministry of Foreign Affairs did not immediately comment.