JAPANESE MORNING PRESS HIGHLIGHTS 08/11/08

UNCLAS SECTION 01 OF 09 TOKYO 002196

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 08/11/08

Index:

China relations:
1) In meeting in Beijing, Prime Minister Fukuda, President Hu agree
to completely resolve poisoned dumpling issue (Mainichi)
2) Text of exchange between Prime Minister Fukuda, China's President
Hu Jintao (Yomiuri)
3) No progress in sight in patching up Japan-South Korea relations,
strained over Takeshima isles issue (Mainichi)

North Korea problem:
4) In talks with North Korea that restart today, Japan to pursue
DPRK promise to reinvestigate the abduction issue (Mainichi)
5) Foreign Minister Koumura: If DPRK starts reinvestigation of
abductions, some sanctions could be removed (Tokyo Shimbun)
6) State Minister for Abduction Issue Nakayama acknowledges that if
new developments occur in talks with North Korea, sanctions could be
removed (Nikkei)
7) Senior U.S. official suggests that North Korea will stay on the
terror-sponsor list because nuclear "replies are not satisfactory"
(Yomiuri)

Political agenda:
8) LDP suddenly turns cautious about passing extension of
anti-terrorist law that allows MSDF refueling services in the Indian
Ocean (Mainichi)

9) Democratic Party of Japan eager to elect Ozawa to another term
without formal vote in order to ready for anticipated early Lower
House election (Nikkei)
10) August 15 is coming but all is quiet in the Fukuda
administration over the Yasukuni issue (Nikkei)
11) LDP's Koga, who heads the bereaved family association for the
war dead, calls for separation of Class-A war criminals from
Yasukuni Shrine (Nikkei)

The economy:
12) Private economic think-tanks agree that the economy is likely to
experience negative growth next period (Yomiuri)
13) Farm minister Ota says consumers are too "clamorous" over food
safety (Nikkei)

Articles:

1) Japanese, Chinese leaders agree at summit to do their utmost to
settle gyoza dumpling poisoning incident

MAINICHI (Page 2) (Full)
August 9, 2008

Prime Minister Yasuo Fukuda on August 8 prior to the opening
ceremony of the Beijing Olympic Games separately held a meeting with
Chinese President Hu Jintao and Premier Wen Jiabao for about 40
minutes each. Fukuda and Hu agreed to aim at settling the
Chinese-made poisoned dumpling poisoning, regarding which it was
revealed that there were reports on poisoning in China as well, at
an early date. Hu stated, "We will investigate what really happened,
by accelerating investigative cooperation."

Fukuda urged China to provide information, including progress on the
investigation, pointing out: "The Japanese people have a strong
interest in the poisoned dumpling incidents. I hope that China will

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solve the case as soon as possible. I would like to solicit further
cooperation." Meeting the press after the summit, Fukuda told a news
conference, "I believe Japan and China will make progress on their
effort to unravel the truth."

Referring to a case in which a Japanese reporter was assaulted by a
policeman in the Uighur Autonomous Region of China, Fukuda during
his meeting with Wen said, "The incident is very regrettable." Wen
responded, "We attach importance to what happened. We would like to
secure the safety of Japanese reporters." Fukuda also called on
China to make improvements on the Tibet issue. Wen indicated the
Chinese government's stance of continuing a dialogue with the 14th
Dalai Lama. Fukuda will leave Beijing in the early hours of the 9th
and attend the Nagasaki Atomic Bomb Victims Memorial Peace Prayer
Ceremony to be held in Nagasaki on the morning of the same day.

2) Text of exchanges between Prime Minister Fukuda and China's
President Hu Jintao

YOMIURI (Page 4) (Full)
August 9, 2008

Japan-China relations

Prime Minister Fukuda: Congratulations on the Olympics opening
ceremony. I am praying for the speedy recovery of Sichuan from the
earthquake disaster.

President Hu: I feel deep friendship for Japan as a result of your
precious cooperation and assistance after the great Sichuan
earthquake. The strategic, mutually beneficial relationship between
China and Japan is contributing to the stability of the entire
world. It is important that we further deepen ties.

Poisoned dumpling incidents

Fukuda: The concern of the Japanese public is very high. I am hoping
for progress in the investigation and a rapid resolution of the
issue. I would like to strengthen cooperation to clear up the truth,
including the relationship to the poisoning incidents that occurred
in China in June. Information disclosure is extremely important.

Hu: We are consistently giving priority to this issue. I would like
to put in every effort to resolve it as quickly as possible.

Bilateral relations

Fukuda: We are hoping to move Japan-North Korea relations forward,
as well, including the abduction issue. We hope to see China work on
that country.

Hu: I wish to see normalization of relations between Japan and North
Korea, as well as progress on the nuclear issue at the same time.

Incident of violence against Japanese reporters in the Xinjiang
Uighur autonomous region

Fukuda: We regret very much this incident.

Hu: We are giving priority to this incident, and will handle it
properly. We welcome Japanese reporters covering the news, and will
secure their safety.

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Tibet issue

Fukuda: We hope for leadership to be displayed to correct the
situation through dialogue.

Hu: The essence of the problem lies in the issue of (the country's)
unified yet split situation. There have been two dialogues with the
Dalai Lama's side. The dialogue will continue.

3) Japan-South Korea summit meeting not held due to Takeshima islets
issue still remaining

MAINICHI (Page 2) (Excerpts)
August 9, 2008

The Japan-China summit meeting on August 8 served as a venue for
both countries to play up friendly bilateral ties, as seen by
President Hu Jintao warmly receiving Prime Minister Fukuda, setting
their meeting for the day of the opening ceremony of the Beijing
Olympic Games. However, this was the only formal summit Fukuda held.
A meeting with South Korea's President Lee Myung Bak was not held
due to hard feelings left by the Takeshima islets issue. A challenge
that Japanese diplomacy is facing has been revealed against the
backdrop of the Olympic opening ceremony, in which China
demonstrated its vigor as a major power.

President Lee Myung Bak attended the opening ceremony. But not even
an attempt to coordinate views or schedules was made in order to set
up a bilateral summit. One senior Foreign Ministry official
revealed, "Given the state of public opinion in South Korea, the
situation does not allow us to hold a summit." The situation is not
yet conductive to allow a meeting with a North Korean senior
official, either, even though Supreme People's Assembly Presidium
Kim Yong Nam attended the opening ceremony. Despite China's
favorable treatment, Japan's diplomacy clearly faces a severe
reality.

4) In talks to start today, Japan to call on North Korea to
determine details about investigation of abductions

MAINICHI (Page 2) (Excerpts)
August 11, 2008

(Furumoto, Shenyang)

Japan and North Korea will hold official working-level talks in
Shenyang, China, on Aug. 11-12, with an eye on a resumption of talks
by the working group on normalizing bilateral diplomatic relations
set up in the six-party talks. The talks will take place after a
hiatus of two months since the ones in Beijing in June, in which
North Korea agreed to reinvestigate the issue of its past abductions
of Japanese nationals.

Japan aims to bring about an agreement to (1) determine specifics,
including who should be selected as investigation committee members
and when the reinvestigation should be conducted; and (2) create a
mechanism to enable Japan to verify the credibility of the
investigation at any time. The talks will also focus on when Japan
would partially lift its economic sanctions against North Korea.

Japan is set to approve an independent investigation by North Korea,

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instead of a joint one with Japan. This decision stems from the
judgment that even if Japanese police officers join it, the
investigation will become limited because they cannot use public
authority in North Korea and that the North might cite their
participation as an excuse for a limited investigation.

To bring about an effective investigation, Japan will ask the North
to have an investigative agency with its authority to undertake the
investigation with responsibility and announce the timing of the
start and end of the investigation. Japan will also ask the other
side to set up an arena for Japan to seek explanations and express
its views about the contents of the investigation.

If North Korea accepts these Japanese proposals, Pyongyang will
likely to call on Japan to swiftly remove its economic sanctions,
but Tokyo has decided to lift sanctions at the time when the North
starts reinvestigation, based on the principle of action for action.
Japan is also considering the possibility of carrying out the terms
of the agreement reached in June step-by-step, in accordance with
the contents of North Korea's agreement.

5) Japan may partially lift sanctions if N. Korea reinvestigates
abductions: Koumura

TOKYO SHIMBUN (Page 2) (Full)
August 11, 2008

Foreign Minister Masahiko Koumura, appearing yesterday on an NHK TV
program, discussed the working-level talks to be held between Japan
and North Korea in China's Shenyang from today. He indicated that
the Japanese government would lift some of its economic sanctions on
North Korea as it had decided at the last round of talks in June to
do so. "If they determine how to discover and repatriate survivors
(on the issue of Japanese nationals abducted to North Korea),and
when we confirm that they have started their reinvestigation, we
will then ease the sanctions, though slightly," Koumura said.

Koumura also mentioned his outlook: "We want them to clearly show us
how they will reinvestigate the issue to repatriate survivors. We
want them to get it started as soon as possible."

Concerning food poisoning from frozen 'gyoza' dumplings made in
China, Koumura clarified that he would visit China on Aug. 16-18 to
meet with Chinese Foreign Minister Yang Jiechi and ask China to
accelerate investigations into the incident.

6) Abduction Minister Nakayama: Sanctions may be lifted if there is
new developments

NIKKEI (Page 2) (Full)
August 11, 2008

Appearing on an NHK program yesterday; Kyoko Nakayama, minister in
charge of abduction affairs, made this remark regarding a
reinvestigation of the abduction issue that North Korea had
promised:

"It would be a new development if it becomes clear that North Korean
leaders and senior officials would take action to have the remaining
Japanese abductees in North Korea returned to Japan. If the
situation changes, there would be a possibility of Japan removing
sanctions."

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Foreign Minister Masahiko Koumura stressed: "If a concrete
reinvestigation method is decided and if our side agrees to it, we
will do what we promised after we confirm the initiation of the
reinvestigation."

7) U.S. to put off delisting decision; senior official: "We have not
received satisfactory reply"

YOMIURI (Page 2) (Full)
August 11, 2008

(Kurose, Beijing)

In a press conference in Beijing on Aug. 10, Dennis Wilder, a senior
official of the White House National Security Council (NSC),
announced that the Bush administration will most likely decide to
delay implementing its decision to delist North Korea as a state
sponsor of terrorism from the initial Aug. 11 deadline. Wilder said:
"I think it is reasonable to say that tomorrow will come and go
without anything happening."

Wilder said: "The U.S. will continue talks with North Korea" with
the aim of reaching an agreement on procedures for verifying the
contents of North Korea's declaration on its nuclear development
programs. But he added: "We have not received a satisfactory reply
yet" from North Korea about a verification plan presented by the
U.S.

According to Wilder, U.S. Assistant Secretary of State Christopher
Hill, the chief envoy to the six-party talks, is now engaged in
consultations with China on the delisting issue in Beijing, timing
it with President Bush's visit to China.

8) LDP cautious about extending antiterror law

MAINICHI (Page 2) (Full)
August 11, 2008

Taro Aso, secretary general of the ruling Liberal Democratic Party,
and other LDP executives have now turned cautious about extending
the new Antiterrorism Special Measures Law at the next extraordinary
Diet session to continue the Maritime Self-Defense Force's refueling
activities in the Indian Ocean to back up antiterror operations in
Afghanistan. Aso's predecessor, former LDP Secretary General Bunmei
Ibuki, intended to get a bill through the Diet extending the law
even by taking a second vote in the House of Representatives,
assuming the bill would be voted down in the opposition-controlled
House of Councillors. However, Aso and LDP General Council Chairman
Sasagawa intend to prioritize dialogue with the opposition bench and
will consider such antiterror assistance measures as tasking the
MSDF with escorting tankers instead of refueling activities.
Meanwhile, New Komeito, the LDP's coalition partner, is reluctant to
extend the law, with an eye on a potential dissolution of the House
of Representatives for a general election. Aso and other LDP leaders
are therefore believed to be showing consideration for New Komeito
and aiming to obtain cooperation from the leading opposition
Democratic Party of Japan (Minshuto) on other antiterror backup
measures.

Aso met the press after becoming LDP secretary general. In his
inaugural press remarks, he stressed: "I don't want to go straight

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away for the option of taking a second vote in the House of
Representatives. It's most important to hold inter-party talks." He
then proposed: "If the opposition parties are against refueling, we
will have to consider such measures as having the Self-Defense
Forces escort Japanese oil tankers." Sasagawa also made a similar
remark. LDP Election Strategy Council Chairman Makoto Koga,
appearing on a TV program aired on Aug. 8, also suggested the need
for the LDP to do all it can to talk with the opposition parties
about Japan's international contributions other than refueling.

One of the LDP's four top executives explained what Aso meant to say
about his proposal of escorting tankers: "Japan is providing free
oil while its prices are rising, and the government plans to extend
the mission. This alone can't hook up the DPJ like fishing. We
should prepare various ideas and call on the DPJ for talks."

The LDP leadership is now about to switch Ibuki's policy course due
in part to New Komeito's reluctance to take a second vote in the
House of Representatives. New Komeito anticipates that the House of
Representatives would be dissolved later this year or early next
year for a general election. The party therefore insists on calling
an extraordinary Diet session in late September to shorten it.

However, the government is going to extend the MSDF's Indian Ocean
refueling mission in order for Japan to continue its cooperation on
the U.S.-led war on terror. However, Chief Cabinet Secretary
Nobutaka Machimura is negative about the idea of escorting tankers.
"We must think well about whether it can be an international
antiterror measure," he said on Aug. 6. One senior official of the
Defense Ministry indicated that the idea be unrealistic, saying it
could conflict with the constitutional prohibition of Japan from
exercising the right of collective self-defense.

9) Early Diet dissolution possibility having an impact on the DPJ
presidential election: Momentum building to argument for reelecting
incumbent without a vote

NIKKEI (Page 2) (Excerpt)
August 11, 2008

It is a month now until the Democratic Party of Japan (DPJ) will
announce on Sept. 8 that it will hold a party presidential election.
While those calling for the incumbent Ichiro Ozawa to be supported
for a third term are increasing, rival candidates continue to
posture. The party is preparing for Diet dissolution and a snap
election expected by the end of the year. So in a mood of giving
priority to a Lower House election over a party election, the voices
of those saying that the party would lose its vitality without a
formal election are being drowned out.

10) Prime Minister Fukuda has no plan to visit Yasukuni Shrine on
Aug. 15; Forgoes allocating feasibility study money for construction
of new national memorial facility

NIKKEI (Page 2) (Excerpts)
August 11, 2008

Prime Minister Yasuo Fukuda has no plan to visit Yasukuni Shrine on
August 15, the anniversary of the end of World War II. He also will
forgo a plan to allocate funds for a feasibility study on building a
new national memorial facility, a project that came up while he was
serving as chief cabinet secretary in the government of Prime

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Minister Junichiro Koizumi. He intends to take a somewhat aloof
attitude toward the Yasukuni issue in order to prevent it from
becoming a political issue. Under the Fukuda cabinet, the Yasukuni
issue has disappeared, from the central political stage, although it
drew political strong attention in the Koizumi and Abe cabinets.

Fukuda told the press corps on Aug. 5 that he would not visit
Yasukuni Shrine: "I will attend a memorial service for the war dead
on Aug. 15. I want to pay my respects at the Chidorigafuchi National
Cemetery." Among the new cabinet ministers, only Justice Minister
Okiharu Yasuoka has stated he will visit Yasukuni Shrine on Aug. 15.
Agriculture, Forestry and Fisheries Minister Seiichi Ota said: "I
will probably go there."

It is not that Fukuda lacks interest in the annual memorial service
for the war dead. He has on Aug. 15 every year paid his respects at
the Shinto shrine in Takasaki City, Gunma Prefecture, his hometown,
except for the year when he served as chief cabinet secretary. A
person close to Fukuda said: "(Fukuda) has privately visited
Yasukuni Shrine, thinking that it is not good to visit the shrine
along with many other politicians."

Fukuda is only remotely connected to the Japan Association for the
Bereaved Families of the War Dead (Izokukai). He took part in only
two events held by the association -- one in September 2002 as chief
cabinet secretary and the other in November 2007 as prime minister.

During his tenure as chief cabinet secretary, Fukuda headed the
government's informal council to consider what kind of a memorial
facility Japan should build. The panel in December 2002 issued a
report proposing the construction of a new national memorial
facility for all the war dead that would not be connected with any
religious faith.

However, the government has forgone allocating money for a
feasibility study for the construction of a new memorial facility
because some Liberal Democratic Party (LDP) lawmakers and the
Izokukai have strongly reacted to the idea. Kaoru Yosano, minister
of state for economic and fiscal policy, once referred to the
possibility of expanding the Chidorigafuchi National Cemetery in
order to place there the ashes of foreigners who died in World War
II. However, nothing specific has ever happened.

11) Izokukai Chairman Makoto Koga says in interview, "Discussion to
remove enshrined Class-A war criminals from Yasukuni Shrine
unavoidable"

NIKKEI (Page 2) (Full)
August 11, 2008

-- How does the Japan Association for the Bereaved Families of the
War Dead think about how Yasukuni Shrine should be?

Makoto Koga: For the bereaved families of the war dead, Yasukuni
Shrine is the only memorial facility in our country. But it is
extremely regrettable that all the Japanese do not think that
Yasukuni Shrine is a facility to pay respects for their ancestors
and pray for peace. We have studied how we should go about in order
to have all the people pay their respects at the shrine. It is not
good that Yasukuni Shrine remains as is.

-- Do you think the argument to remove the enshrined Class-A war

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criminals from Yasukuni Shrine will become an issue?

Koga: I don't think so because the Izokukai has been discussing it.
However, a view calling for separating the Class-A war criminals
from Yasukuni will probably come up. I think we will need to discuss
it. We cannot avoid it and we must not avoid it.

12) Negative growth in GDP for April-June quarter expected,
according to projection by private research centers

YOMIURI (Page 2) (Full)
August 11, 2008

The likelihood is now that the gross domestic product (GDP) in the
April-June quarter to be released by the Cabinet Office on August 13
will move into the negative territory in real terms, which exclude
fluctuations in prices. This is due to a sharp fall in exports and
consumption.

All major private research centers have projected negative growth in
GDP, compared with the previous quarter. The average number
predicted by the seven research centers is a negative 0.7 PERCENT
or a 2.8 PERCENT drop in annual terms, compared with the previous
quarter.


Regarding exports, which had been robust up until the previous term,
all seven research centers predicted negative growth in comparison
with the previous term. The average number is a negative 2.7 PERCENT
. It would be the first drop in about three years since the
January-March quarter in 2005, if it turns out that exports in that
quarter have actually declined into the negative territory.

Projection of GDP growth in real terms for April-June quarter 2008
by private research centers

Dai-ichi Life Research Institute -0.8 (-3.2)
Mitsubishi Research Institute -0.7 (-2.9)
Daiwa Institute of Research -0.6 (-2.4)
NLI Research Institute -0.7 (-2.9)
Nomura Securities Financial and Economic Research Institute -0.6
(-2.5)
Mizuho Research Institute -0.8 (-3.1)
Japan Research Institute -0.6 (-2.6)
Average figure -0.7 (-2.8)
Track record in January-March quarter 1.0 ( 4.0)

PERCENT growth rate in comparison with the previous term. Figures
in parentheses are annual growth rates compared with the previous
term.

13) Consumers "noisy" about food safety: Ota

TOKYO SHIMBUN (Page 2) (Abridged)
August 11, 2008

Agriculture Minister Seiichi Ota, appearing on an NHK TV talk show
aired yesterday, said Japan is "particular about cleanliness" when
it comes to food safety. "So," Ota went on, "there's no need to
worry about domestic food products." He added, "If people as
consumers noisily say this and that, then we have to answer them."


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In the wake of disguising or mislabeling food products and food
poisoning from frozen 'gyoza' dumplings made in China, Prime
Minister Fukuda set forth his initiative to create a consumer agency
and appealed on ensuring food safety. However, the opposition
parties are strongly opposed to the idea of creating a consumer
agency. One opposition party lawmaker noted, "The public is
bothersome, so he will create a consumer agency. That's what he
means."

Asked about food safety in the show, Ota stressed: "Japan is
different from a country where it's all right to cover up anything
troublesome like China, which is a socialist country, and Japan is
also different from a country where it's all right to give no
thought to consumers."

Ota specified the traceability of information about food production
and distribution as well as food sanitation control called HACCP,
short for hazard analysis and critical point. In this regard, Ota
said, "Japan is safe." "But," he also said, "consumers are noisy, so
we will do it in an even more thoroughgoing way."

SCHIEFFER