China and Japan have agreed to strengthen co-operation in energy-saving, environmental protection, small and medium-sized businesses and multilateral affairs.

The two sides reached "wide consensus" on these topics at the fifth negotiations of the Sino-Japanese economic partnership yesterday in Beijing, the Ministry of Commerce said in a statement, without elaborating.

The negotiations also touched on issues concerning trade, investment, finance and construction.

"The two parties will look for new growth in economic and trade co-operation," said Chen Jian, China's assistant commerce minister.

Japan's Deputy Minister for Foreign Affairs Mitoji Yabunaka said Japan is ready to promote economic co-operation with China and the country welcomes investment from China.

The negotiations between China and Japan were launched in 2002.

China's team was composed of officials from 12 ministries, including the Ministry of Commerce, Ministry of Information Industry and Ministry of Labour and Social Security.

Growth in trade and investment between China and Japan has slowed since 2004, although Japan still remains a major trade partner of China and a source of large direct foreign investment.

According to statistics from the customs, Sino-Japanese trade, which was one-fifth of China's total foreign trade volume in 1994, only accounted for 13 per cent last year. Bilateral trade only increased less than 13 per cent year-on-year in the first 10 months this year. China's trade with the United States and the European Union both grew by more than 24 per cent year-on-year in the same period.

In the first half of this year, Japan's direct investment in the manufacturing sector of China was US$2.24 billion, reflecting a decline of more than 30 per cent from a year ago.

The "cooling" in economic exchanges is a result of various political issues.

However, Xu Changwen, a researcher with the Chinese Academy of International Trade and Economic Co-operation, said recent progress in the bilateral political relationship has created a good environment for the development of economic relations.

He predicted that the two countries would increase exchanges in trade and investment, in particular in the energy, environment and financial sectors, and this would boost trade and economic growth in the coming year.

(China Daily 12/21/2006 page2)