Japan should have consulted China before freezing loans, Chinese Foreign Ministry said yesterday.

Tokyo's unilateral decision to suspend an agreement on yen loans contributes little to the improvement of chilly bilateral ties, ministry spokesman Qin Gang said at a regular news conference in Beijing.

"Such an agreement (on loans) is mutually beneficial," Qin said. "It is not charity given by one country to another."

A Japanese diplomat announced yesterday that the government was freezing loans to China at least till the end of this month because of worsening relations between the two nations.

Also yesterday, Chief Cabinet Secretary Shinzo Abe told a news conference in Tokyo that Japan would not lend any more to China during the current fiscal year, which ends on March 31, but may start releasing the loans next month if the situation improves.

Relations between China and Japan have soured because of various issues including Japanese Prime Minister Junichiro Koizumi's repeated visits to the Yasukuni Shrine, a symbol of Japan's past militarism, and the dispute over gas exploration rights in the East China Sea.

"We should have exchanges and consultations over differences and problems; and properly resolve those issues," Qin said. "As for Japan's loan to China, we think this issue should also be resolved in line with this principle."

At the news briefing, Qin also opposed a Japanese proposal to revamp UN funding which would impose higher dues on some of the permanent members of the Security Council.

Japan's suggestion on membership dues is an attempt to use the so-called funding-responsibility concept to reject the widely-accepted funding-ability principle, Qin said.

The proposal links "power" in the council to "membership dues" and tries to pave the way for its permanent membership in the council by means of "money for power," he said.

"It violates the basic principle of equality in sovereignty that is stated in the UN Charter and seriously damages the interests of developing countries," Qin said.

Earlier this month, Japan submitted a proposal to the world body asking each permanent member to pay at least 3 to 5 per cent of the UN budget. The proposal has also faced opposition from Russia and the United States.

China makes an important contribution to the UN as the No 9 payer, Qin said.

Source: China Daily