China, Japan seek common ground on energy

Chinese President Hu Jintao listed cooperation on energy and environmental protection as top priorities for the two countries during a visit to Tokyo this week focused on mending ties after a decade of bitter wrangling over historical and territorial issues.

Japanese Prime Minister Yasuo Fukuda hinted that the neighbors were on the verge of settling a spat over potentially lucrative maritime gas deposits, though he gave no details.

China, including Hong Kong, is now Japan's largest trading partner, with bilateral trade at $237 billion (170 billion euros) last year.

"I believe there is huge potential," Hu told Japanese business leaders Wednesday.

Putting business before politics, Hu emphasized China's interest in Japan's advanced technology, expertise it needs to improve its energy efficiency and rescue its ravaged environment.

"The two countries are highly complementary to each other in their economic growth and their economic, technical and trade cooperation have tremendous potential," China's official Xinhua News Agency declared.

More than half of trade volume between the two countries is in mechanical and electrical products, it noted.

The proposed refinery venture between Nippon Oil and China's state oil giant, the biggest cooperation project in the energy field so far, reflects the complementary needs of the two major crude oil importers now that crude oil prices have nearly doubled from a year ago.

Details of the plan have not yet been announced, although the statement by Nippon Oil said that the Japanese side would hold 51 percent of the venture, with CNPC taking the remaining 49 percent.

The plan suits the needs of both sides. Booming China faces severe shortfalls in refining capacity, while Japanese refiners are struggling with overcapacity and dwindling demand.

Nippon Oil said it also agreed to increase the amount of crude oil it refines for CNPC under earlier cooperation deals to 70,000 barrels a day in 2008 from the earlier 50,000 barrels a day.

Despite the positive news on the energy front, inevitably, friction remains.

Japan's Ministry of Economy, Trade and Industry issued a report Thursday citing a high Chinese tariff on auto parts among various allegedly unfair trade practices. It also criticized China's lax enforcement of pirated and counterfeited products.

China ranked second, with 29 cases among the 113 "questionable" trade practices cited in the METI report. The United States led with 36 cases.