China Expects $4-Billion Trade Deficit With Japan, Premier Zhao Tells Nakasone

Premier Zhao Ziyang forecast Sunday that China will have a $4-billion trade deficit with Japan this year and called on the Japanese to buy, lend and invest more in China, informed Japanese sources said.

Zhao told Japanese Prime Minister Yasuhiro Nakasone, who left for home Sunday after a 25-hour visit, that the trade deficit is the most serious problem in Sino-Japanese relations. The forecast deficit was well below last year’s nearly $6 billion, but Zhao said this is partly because overall trade is down.

Zhao said Japan must help in achieving balanced bilateral trade while China endeavors to reform its trading system and improve the quality of its exports.

The Japanese sources said Zhao also recommended that Japan increase its development loan financing to China in 1991, after the end of a seven-year, $3-billion loan at 3.5% interest.

Despite some increase in Japanese investment in China in the last few years and Chinese efforts to make conditions more attractive, Zhao said the scale of such investment is still highly inadequate, especially considering the pace at which Japanese investments are moving ahead in other countries.

He urged the Japanese government to do more to encourage Japanese investment groups to do business in China.

In other matters, Nakasone offered to act as a go-between in efforts to establish more contacts and better relations between China and South Korea.

Nakasone told reporters that he conveyed to Chinese leaders South Korea’s “strong request” for increased trade and sports links with Peking. China has no diplomatic relations with South Korea, its enemy in the 1950-53 Korean War.

“To ease tension and maintain peace in northeast Asia, we will be pleased if necessary to play the role of a bridge, or go-between, between China and South Korea,” Nakasone said.

Japanese sources said Nakasone made the offer in his meeting Saturday with Hu Yaobang, general secretary of the Chinese Communist Party. Hu did not reply but nodded his head attentively, the sources said.

Nakasone also met with Chinese leader Deng Xiaoping, who briefed him on China’s new “political reform” program aimed at separating the powers of the Communist Party and government. Japanese sources said Deng told Nakasone that the program will take at least 10 years to complete and will rejuvenate the party and government.