JAPANESE MORNING PRESS HIGHLIGHTS 06/04/09

UNCLAS SECTION 01 OF 11 TOKYO 001250

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/04/09

Index:
1) Top headlines
2) Editorials
3) Prime Minister's daily schedule (Nikkei)

Defense and security affairs:
4) Liberal Democratic Party (LDP) national defense panel approves
concept of Japan having the capability of striking enemy bases
(Tokyo Shimbun)
5) LDP proposes adding to defense planning the capability of
striking enemy bases, calls for increased defense budget for that
purpose (Sankei)
6) China's ambassador to Japan seeks to constrain Japanese calls for
having a preemptive strike capability (Sankei)
7) Chinese Ambassador favors dialogue in dealing with North Korea
(Nikkei)
8) LDP panel has completed its review of the defense buildup plan
(Mainichi)
9) Government has strong interest in North Korea apparently picking
a successor to Kim Jong Il, while shooting missiles and testing
nuclear weapons (Yomiuri)

10) Iraq Embassy being sued by realtor to being in arrears in paying
rent (Mainichi)

11) Prime Minister Aso has a 20-minute teleconference with Japanese
astronauts in the space station (Sankei)

Political agenda:
12) Issue of reappointment of the head of Japan Post has become a
tug of war in the Aso cabinet (Sankei)
13) Aso administration in the lurch over such issues as postal
appointment, hereditary seats in the Diet, and calls for an early
party presidential election (Yomiuri)
14) Democratic Party of Japan's (DPJ) Kan present own proposals for
cabinet reorganization, constraining bureaucratic influence on
policy (Yomiuri)

15) Japanese, Chinese governments to form experts team to build
system to protect intellectual-property (IP) rights (Mainichi)

16) Fiscal policy panel calls for guidelines aiming as new fiscal
reconstruction target (Yomiuri)

Articles:

1) TOP HEADLINES

Asahi:
Japan's fertility rate hits 1.37 in 2008, up for third straight
year

Mainichi:
Japan, China agree to set up working team on intellectual property
rights

Yomiuri:
Tokyo District Court decides former SFCG chief liable for 71.7
billion yen worth of damages

Nikkei:
Japanese firms increasingly rely on Asian markets

TOKYO 00001250 002 OF 011



Sankei:
Chinese kidnapping groups active in Tokyo

Tokyo Shimbun:
Prosecutors to approve conclusion of re-examination on Ashikaga
case

Akahata:
Young workers win direct employment

2) EDITORIALS

Asahi:
(1) New-type flu: Continue pay attention
(2) Coal fired power generation: Time for low-carbon society

Mainichi:
(1) Increase in fertility rate: All possible measure needed for
stable rise
(2) 20th anniversary of Tiananmen Square Incident: Democracy, human
right long way for China

Yomiuri:
(1) More support needed to increase fertility rate
(2) Shizuoka Airport: How to overcome chronic deficits

Nikkei:
(1) U.S. treasury secretary assures China "safety of dollars"
(2) Efforts necessary to increase foreign tourists

Sankei:
(1) 20th anniversary of Tiananmen Square Incident: Political reform
must be carried out
(2) Government must show strategy for economic recovery with
"big-bone policy"

Tokyo Shimbun:
(1) Reappointment of Japan Post president: Public opinion needed
(2) Mob violence incidents: Why do college students repeatedly carry
such out?

Akahata:
(1) Greenhouse gas reduction: Ambitious goal should be set

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, June 3

NIKKEI (Page 2) (Full)
June 4, 2009

07:48 Took a walk around the official residence.
10:01 National mayors' meeting at Grand Prince Hotel Akasaka.
10:47 Met with former Finance Minister Nukaga at the Kantei.
11:04 Met Miss Iris Haruka Motoya from Itako City, Ibaraki
Prefecture. Nukaga was present. Then met with Lower House members
Seiji Nakamura and Chiken Kakazu, and Itoman City Mayor Uehara.
12:52 Met with Lower House member Gaku Hashimoto.
13:00 Met with Chief Cabinet Secretary Kawamura and Deputy Chief
Cabinet Secretary Uruma, followed by executive officer Endo of the
new sports promotion law enactment project team of the Diet members'

TOKYO 00001250 003 OF 011


caucus supporting sports. Kawamura was present.
14:25 Met with Lower House member Shunichi Suzuki.
15:02 Met with Chairman Hidehiro Ami of the Kanuma Azalea Bonsai
Exports Promotion Council. Former justice minister Moriyama and
Lower House member Koya Nishikawa. Then met with Kawamura.
15:32 Taping to invite the Olympic Games to Tokyo. Then met with
Finance Minister Yosano, Vice Finance Minister Sugimoto, Budget
Bureau Director General Tango and Tax Bureau Director General Kato.
17:06 Space-related event by astronaut Chiaki Mukai. Then
communicated with astronaut Koichi Wakata, now staying the
International Space Station. Then met with Vice Election Committee
Chairman Suga.
18:26 Council on Economic and Fiscal Policy meeting. Agriculture
Minister Ishiba and Kawamura remained.
20:15 Dined with his secretary at a Chinese restaurant in Grand
Prince Hotel Akasaka.
21:36 Met his secretary at Imperial Hotel's bar "Golden Lion."
22:48 Arrived at the official residence.

4) LDP panel OK's enemy base strike option

TOKYO SHIMBUN (Page 2) (Full)
June 4, 2009

The ruling Liberal Democratic Party yesterday held a meeting of its
defense division's defense policy subcommittee to discuss the
government's plans to revise the National Defense Program Guidelines
late this year. In the meeting, the subcommittee approved a policy
proposal that features acquiring the capability of striking enemy
bases, such as attacking ballistic missile launch pads before the
enemy launches missiles. The LDP, with its defense division's
approval, will make this policy proposal to the prime minister's
office.

The original wording was modified in the approved policy proposal.
In the modified policy proposal, "enemy base" is expressed as "rear
base," weakening the tone used in the original draft proposal.
Meanwhile, the modified proposal paper suggests that Japan should
aim for "acquiring the possibility of striking rear bases under
cooperative arrangements between Japan and the United States." This
is intended to prevent the wording from being interpreted as
attempting to have attack capabilities of Japan's own.

In yesterday's meeting of the subcommittee, concerns were voiced
from among its members about the advocacy of striking enemy bases.
"This may cause other countries to misunderstand that Japan will try
for arms expansion," one member said. Another member said, "This is
too hasty an argument that ignores public consensus for efficient
defense capabilities." There was also an objection to the policy
proposal's use of a different phrase like "rear base." Concerning
this wording, one of the subcommittee's members argued, "Such
trickery in the wording will bring about a sense of distrust from
other countries."

The subcommittee, based on these arguments, may revise the policy
proposal's wording before it is presented to the prime minister's
office.

5) LDP to propose enemy base strike option

SANKEI (Page 5) (Abridged)
June 4, 2009

TOKYO 00001250 004 OF 011



The ruling Liberal Democratic Party yesterday held a meeting of its
defense division's defense policy subcommittee, with Hiroshi Imazu
presiding. The subcommittee worked out a draft policy proposal
concerning the government's plans to revise the National Defense
Program Guidelines late this year. The policy proposal paper
suggests the need for Japan to acquire the capability of striking
enemy bases, bearing in mind North Korea's repeated nuclear tests
and ballistic missile launches. The policy proposal also calls for
the government to retract its plans to cut back on defense spending
and defense capabilities. In addition, it insists that the
government should maintain and expand its defense spending and the
Self-Defense Forces' manning level. The LDP will shortly submit the
policy proposal paper to the prime minister's office and the Defense
Ministry. The focal point is how far the government will accept the
policy proposal.

In concrete terms, the policy proposal paper suggests the need to
introduce sea-launched cruise missiles, or SLCM for short, as one
possible option of striking enemy bases (missile-launching rear
bases). It says: "Japan should have the capability of striking
missile-launching rear bases within the scope of its defense-only
posture and "should establish an even stronger cooperative setup
between Japan and the United States" in tandem with the U.S.
military's intelligence and strike capability.

6) China envoy checks preemptive strike calls

SANKEI (Page 5) (Full)
June 4, 2009

In connection with North Korea's nuclear testing, there are now
arguments in Japan insisting on the need for Japan to strike missile
sites targeted at Japan or to go nuclear. Chinese Ambassador to
Japan Cui Tiankai, meeting Japanese reporters at the Chinese embassy
in Tokyo yesterday, checked these arguments. Cui said: "The tone of
an argument like this will not be helpful at all to resolve
immediate issues. It will rather bring about negative effects to
Japan's interests. I hope it will not affect Japan's official
standpoint and policy."

7) PRC ambassador: Resolve DPRK issue "through dialogue"

NIKKEI (Page 2) (Full)
June 4, 2009

Chinese ambassador to Japan Cui Tiankai met Democratic Party of
Japan (DPJ) President Yukio Hatoyama at the party's headquarters on
June 3. Regarding North Korea's nuclear issue, Cui said that, "We
must negotiate through dialogue. This is not an issue where taking a
tough stance will suffice," conveying a negative view on imposing
stronger sanctions. On the question of visits to the Yasukuni
Shrine, Hatoyama mentioned that, "I will not make a visit if I
become prime minister." Cui replied that, "The DPJ's interpretation
of history so far is correct."

8) LDP subpanel approves National Defense Program Guidelines
revision plan

MAINICHI (Page 5) (Full)
June 4, 2009


TOKYO 00001250 005 OF 011


The Liberal Democratic Party (LDP) National Defense Division defense
policy subcommittee presented yesterday a set of revisions to its
original proposal produced in the previous meeting on May 25 for the
National Defense Program Guidelines to be revised by the government
at the end of the year. The phrase "to establish a Japan-U.S.
cooperative system" was added to the original proposal in connection
with the possession of capabilities to attack enemy bases based on
opinions voiced in the previous meeting. The need to maintain and
increase the nation's defense spending is also specified in the new
report. The subcommittee approved the revision plan. It plans to
present it to the prime minister after the party makes a formal
decision possibly next week.

The original plan stipulated the need to possess capabilities to
attack enemy bases. The phrase "to establish a stronger Japan-U.S.
cooperative system combining with the U.S. military's information
and strike power" was added to the original proposal. LDP Foreign
Affairs Research Commission Chairman and former vice president Taku
Yamasaki expressed a cautious view as in the previous meeting. He
said: "Are we going to destroy all 200 Nodong missiles in North
Korea? (That would require such equipment) as bombers and aircraft
carriers, in addition to Tomahawk missiles. Such is difficult in
reality." But the revised plan was endorsed by a majority approval.

9) Government has strong interest in whether DPRK nuclear test,
missile launches meant to chalk up achievements for third son as
successor

YOMIURI (Page 2) (Full)
June 4, 2009

The government is showing strong interest in widespread reports that
Kim Jong Un, 26, the third son of North Korea's General Secretary
Kim Jong Il is likely to become his successor. This is because the
DPRK's nuclear test and missile launches, which have antagonized the
international community, might have been aimed at chalking up
achievements to prepare for the succession process. The government
is wary that North Korea may ignore the UN Security Council
resolution and continue in its current behavior.

At a news conference on June 3, Ministry of Foreign Affairs (MOFA)
spokesman Kazuo Kodama stated: "We have a very strong interest in
the domestic political situation in North Korea and will continue to
gather information and analyze such."

The view that Jong Un will be the likely successor of Kim Jong Il is
now also widely accepted in Japan. A government source revealed
that, "We obtained information from several foreign government
sources that the third son will be the successor."

Since May, the DPRK has mobilized its people in a campaign called
"150-day battle" to rehabilitate the economy. Japanese government
officials believe that this campaign is also related to preparations
for the succession. There is strong concern that, "North Korea may
embark on such things as launching ballistic missiles and nuclear
tests until around October" (Ministry of Defense source).

However, the government does not possess its own information on Jong
Un, including on what sort of a person he is. The truth of the
matter is that "there is no way to confirm whether he has indeed
been selected as the successor" (senior MOFA official).


TOKYO 00001250 006 OF 011


10) Real estate firm files lawsuit against Iraqi Embassy for failing
to make rent payments totaling 350 million yen

MAINICHI (Page 27) (Abridged)
June 4, 2009

A real estate company has filed a lawsuit with the Tokyo District
Court against the Iraqi government for failing to pay about half of
the rent for more than 11 years on a building which the Iraqi
government had been using as its embassy. The company is seeking the
Iraqi side to pay approximately 350 million yen. The case was
brought last October, but according to the company's lawyer, a
hearing was held yesterday for the first time. The lawyer said that
since such procedures were being taken as sending a complaint to the
Iraqi government through the Foreign Ministry, the process has been
protracted.

According to the complaint, both sides concluded a lease on a
six-floor building (with total floor space of about 850 square
meters) in Akasaka, Tokyo, in November 1982 at a monthly rent of
about 4 million yen a month. Through a review carried out every two
months, the rent was raised to about 5.8 million yen in June 1994.
Since then, the Iraqi government paid only 3 to 3.5 million yen a
month.

The company pressed the Iraqi side to pay the balance in March 2003.
Two months later, the Iraqi government admitted it had not paid the
full amount and sent a reply asking for a deferred payment. But the
bill has not been paid since then, either. The company has asked the
embassy to pay approximately 353 million yen, an amount worked out
deducting 24 million yen paid as a deposit deducted from the unpaid
rent worth 377 million yen as of January 2006.

The Iraqi Embassy moved to Takanawa, Minato Ward, in February 2006.
The old embassy building has been torn down.

11) Aso communicates with astronaut Wakata

SANKEI (Page 5) (Full)
June 4, 2009

Prime Minister Taro Aso communicated with astronaut Koichi Wakata,
currently onboard the International Space Station, at the Prime
Minister's Office for about 20 minutes yesterday.

Asked by Aso about how he spends his time off, Wakata said: "I
usually watch the Earth from a window or read books." Aso replied:
"That's much better than how I spend holidays as a prime minister."
Hearing one of the students at the elementary school in Saitama
Wakata attended saying: "I want to go to space for the purpose of
sightseeing," Aso said: "I also do not want to stay in such a place
for as long as two months. I am interested in staying there for a
few days."

12) Internal Affairs and Communications Minister Hatoyama hints at
resignation if Japan Post President Nishikawa reappointed

SANKEI (Page 3) (Excerpts)
June 4, 2009

A behind-the-scenes battle over whether Japan Post President
Yoshibumi Nishikawa should be reappointed has now turned into a

TOKYO 00001250 007 OF 011


hopeless mess in the government and ruling parties. Internal Affairs
and Communications Minister Kunio Hatoyama, who is involved in a
heightened confrontation with Nishikawa over such issues as the
selling of Kampo no Yado hotels (to leading company Orix Corp.),
said yesterday: "It is only natural for Mr. Nishikawa to resign. I
will not compromise my creed." He revealed that even if Nishikawa is
reappointed at a shareholders' meeting on June 29, he will not
accept it. He then hinted that he might quit his post if Nishikawa
is reappointed. Meanwhile, many in the government and ruling
coalition have said that Nishikawa should not be replaced as long as
he has no intention to step down. Should Hatoyama take strong
measures, the government and ruling camp might descend into chaos.
In an attempt to resolve the issue, Prime Minister Taro Aso
instructed to Chief Cabinet Secretary Takeo Kawamura and other
officials to persuade Hatoyama. However, the coordination efforts
have encountered difficulties. The issue will create problems for
the future whether Aso backs Hatoyama or Nishikawa. There is little
time left for Aso to make a final decision on the matter.

In front of his private residence in Bunkyo Ward, Tokyo, Hatoyama
told reporters yesterday morning: "Words of a politician carry much
weight. I will not bend my principles. I want you to understand what
I mean by this. It's a serious matter, but I want to stay positive
about it." He hinted that he would prevent Nishikawa from being
reappointed, risking his resignation from his current post. He then
got on the car with a look of relief on his face

At noon on June 3 in Yurakucho, Tokyo, asked by reporters whether he
would resign (if Aso reappointed Nishikawa),Hatoyama looked
uncomfortable and said: "Why do you think I should step down?" He
continued:

"Since there are many problems involving Japan Post that we cannot
understand, it is only natural that Mr. Nishikawa will quit his
post. I have the authority of approval. By using this authority, I
will not approve his reappointment."

However, the situation surrounding Hatoyama has become increasingly
severe day by day. Japan Post decided in an executive meeting on May
22 to let Nishikawa continue to serve in his post. Therefore, it is
certain that Nishikawa will receive approval in the shareholder's
meeting. If Hatoyama invokes his authority to overturn a decision by
the shareholders, the government will be thrown into turmoil.

The ruling Liberal Democratic Party (LDP) is concerned that its
relations with the business world will deteriorate. Three years ago,
the government showed Nishikawa, former president of Sumitomo Mitsui
Banking Co. and former president of the Federation of Bankers
Association of Japan, special treatment to persuade him to serve as
Japan Post president. If the government replaces him, it will be
snubbed by the business circles.

In addition, some LDP members are still suffering from the wounds
inflicted by the dissolution of the House of Representatives four
years ago. The issue of whether Nishikawa will be reappointed or not
will unavoidably develop into debate on the appropriateness of
postal privatization. This will give the anti-mainstream group led
by former LDP Secretary General Hidenao Nakagawa an excuse to remove
Aso from office.

Therefore, LDP Election Strategy Council Deputy Chairman Yoshihide
Suga and former Prime Minister Shinzo Abe, who have close ties to

TOKYO 00001250 008 OF 011


Aso, have repeatedly called on the prime minister to reappoint
Nishikawa, citing that the postal privatization argument should not
be rekindled.

It is said that Aso is leaning toward reappointing Nishikawa. But he
does not want to make Hatoyama lose face because Hatoyama led the
campaign for his three LDP presidential elections. Moreover,
Hatoyama is an advocate of political realignment.

13) Dark cloud again hanging over Aso administration due to spat
over Japan Post president, issue of hereditary candidates, and
growing calls for early LDP presidential election

YOMIURI (Page 4) (Abridged slightly)
June 4, 2009

Internal Affairs and Communications Minister Kunio Yatoyama
suggested that he might step down if he failed to block the
reappointment of Yoshifumi Nishikawa as Japan Post Holdings Co.
president, causing a new source of major trouble for the Aso
administration. Many in the ruling bloc attribute this issue to a
lack of coordination by Prime Minister Aso, and it is casting doubts
about the prime minister's grip on his own party. Although Aso is
seeking the right timing to dissolve the Lower House sometime
between late June and mid-July, some in the Liberal Democratic Party
(LDP) have begun calling for an early LDP presidential election. The
environment surrounding the prime minister is becoming severe. A
scenario for Lower House dissolution for a general election remains
unclear.

Hatoyama is firm resolved to dismiss Nishikawa as Japan Post
president. Asked by reporters yesterday morning if he would resign
if Prime Minister Aso approved Nishikawa's reappointment, Hatoyama
firmly said: "I will never change my belief. I hope you understand
what I mean." Hatoyama told reporters again on the afternoon, "I
will exercise my authorization power for a rightful cause, based on
my belief."

Hatoyama's determination to fire Nishikawa comes from the belief
that public opinion is on his side, according to a Hatoyama aide.
Hatoyama objected to a plan to sell off Kanpo no Yado inns, and a
murky bidding process eventually came to light. That was followed by
a series of irregularities in the postal group. Hatoyama firmly
believes that the top leader must take responsibly for all those
scandals.

Many members in the ruling bloc do not share Hatoyama's view. LDP
Senior Deputy Secretary General Nobuteru Ishihara yesterday
expressed his support for Nishikawa's reappointment.

Many of the irregularities resulted from problems that existed
before the postal system was privatized. In addition, because
Nishikawa was handpicked by former prime minister Junichiro Koizumi,
many are defensive of Nishikawa in the judgment that firing him
would be tantamount to rejecting the Koizumi reform drive.

A New Komeito executive took this view: "Minister Hatoyama is not
necessarily strong in elections. He has won public support over the
Kanpo no Yu issue, so he must have decided to march toward the next
election along this policy course."

Prime Minister Aso said to his aides, "The government must stay away

TOKYO 00001250 009 OF 011


from personnel affairs of the private sector." Aso is apparently
cautious about firing Nishikawa. At the same time, he is reportedly
expecting Nishikawa to step down voluntarily.

Meanwhile, some have suggested that the prime minister's hands-off
approach has aggravated the situation. An LDP Upper House executive
noted yesterday: "The prime minister should have called in Mr.
Nishikawa to bring the matter to a conclusion in person. Instead, he
has left the matter unaddressed and passed up the right timing for a
settlement."

With the next Lower House election approaching, there is strong
discontent in the party with the way the prime minister runs his
administration, in addition to the Japan Post issue.

Faction leaders are desperately trying to discourage a
signature-collecting drive for moving up the LDP presidential
election. But Lower House member Taku Yamamoto, who is spearheading
the drive, indicated yesterday that the drive has won a certain
level of support, saying, "Signatures have been collected from than
10 lawmakers. We have also received over 300 encouraging letters
from rank-and-file party members."

Some in the LDP are also concerned about public reaction to the
party's decision to postpone a plan to restrict hereditary
candidates. The administration's foundation has begun to falter.
"The Lower House election should be postponed as much as possible,"
a ruling party member said.

14) DPJ's Kan makes personal proposal for new government initiative,
including having party executives join the cabinet, banning
bureaucrats from lobbying for certain policies

YOMIURI (Page 4) (Full)
June 4, 2009

Democratic Party of Japan (DPJ) Deputy President Naoto Kan will
publish his personal proposals for initiatives to run a new DPJ
government. The essay will come out in the July issue of Chuokoron,
which will go on sale on June 10. The main points of his proposals
consist of the party's secretary general and Policy Research
Committee chairman serving concurrently in the cabinet to unify the
cabinet and the party, and a shifting from bureaucrat-led
policymaking to political leadership in the policy process.

Kan points out that, "The main reason why Japan is in a stalemate is
because there is too much concentration of political and economic
power, and the local communities have lost their vitality." He
emphasizes that a DPJ administration would transfer authority from
the central bureaucracy at Kasumigaseki to local governments and
that breaking down bureaucrat-led politics, which is the "greatest
obstacle" to this, is an urgent task.

Specifically, he calls for reforms based on the British model. In
order to rectify the situation where cabinet meetings are a mere
formality, he proposes the creation of "ministerial committees"
where a small number of concerned cabinet ministers will discuss
particular issues and present their conclusions to the cabinet
meeting. Budget formulation will be led by the "ministerial
committee on the budget." Bureaucrats will be banned from lobbying
for policies with ruling and opposition party Diet members, while
the discussions at the vice ministers' meeting will only be regarded

TOKYO 00001250 010 OF 011


as suggestions. With regard to Diet affairs, he proposes a departure
from the current practice of the cabinet not being directly involved
with Diet affairs. The party's secretary general, who will join the
cabinet as a minister without portfolio, will take charge of
steering Diet affairs.

He also points out that when the new government is inaugurated, if
the cabinet is formed after the election of the prime minister in
the Diet without adequate coordination of views among the ministers,
it is highly possible that bureaucrats will have the upper hand in
policymaking. He says that it is important that either preparations
to form the cabinet take place before the prime minister's election
or a few days is spent on cabinet formation after the prime
minister's election.

DPJ President Yukio Hatoyama intends to encourage a debate on Kan's
personal proposals in the party and have the outcome reflected in
the DPJ's manifesto for the next House of Representatives election.
Kan will visit the UK from June 6 and flesh out his proposals
further based on the situation there.

15) Tokyo, Beijing to set up working team on intellectual property
rights

MAINICHI (Top Play)
June 4, 2009

Following a flood of illegal copies of Japanese products hitting the
Chinese market, the governments of Japan and China have agreed to
jointly set up a working team to discuss a system of protecting
intellectual property and settling problems involving infringements
on such rights. This is the first time for Japan and China to set up
a framework for discussions by experts on intellectual property
rights in general, such as copied products and infringements on
registered trademarks. Economy, Trade and Industry Minister
Toshihiro Nikai and his Chinese counterpart Commerce Minister Chen
Deming will exchange memorandums on the sidelines of the Japan-China
High-Level Economic Dialogue to be held in Tokyo on June 7.

Concerning the intellectual property rights issue, Japanese
companies whose rights were violated have been filing complaints
over individual cases. However, this has not led to a fundamental
solution because such offenses have occurred repeatedly even after
the lawsuits had been filed. The working team will hold its first
meeting before year's end, bringing together related government
agencies of both countries, such as METI and the Chinese Ministry of
Commerce. Since the point of contact covers several government
agencies of both countries, holding such a working team will enable
cross-sectional talks.

Triggered by its entry into the World Trade Organization (WTO) in
2001, the Chinese government has started strengthening its
protection of intellectual property rights. It finds it imperative
to take measures to counter the increasingly ingenious tricks used
to make copied products. Concerning registration of trademarks, the
Chinese law prohibits the registration of widely known names of
places. However, there is no end to applications for the
registration of names such as "Yokohama," "Matsuzaka Beef" or
similar words.

When the word "Aomori" was registered, Aomori Prefecture filed a
complaint and its petition was granted after discussions that lasted

TOKYO 00001250 011 OF 011


for nearly five years. However, another registered trademark similar
to "Aomori" was found immediately after the settlement. As such, the
cat-and-mouse game continues.

A senior government official explained, "Companies or local
governments are limited in what they can do even if they file
lawsuits, because they are costly and time-consuming and in many
cases accused companies do not take any improvement measures.

The setting up of the working team is designed to strengthen the
monitoring of illegal activities, involving the Chinese authority as
well, and promoting assistance to victim companies and local
governments with the development of a system designed for an early
settlement of disputes.

16) Government to set fiscal reconstruction goal based on new
milestone, debt-to-GDP ratio

YOMIURI (Page 1) (Full)
June 4, 2009

The government decided yesterday to use the ratio of public debt to
the nation's gross domestic product (GDP) in setting a goal for
fiscal reconstruction. Under the current policy, top priority is
placed on achieving a primary balance surplus. The government will
work out details, such as a numerical target and the timing for
achieving it, and incorporate them in its annual economic and fiscal
policy guidelines for 2009, which are to be finalized by the end of
this month.

A private-sector member of the Council on Economic and Fiscal
Policy, chaired by Prime Minister Aso, presented this plan during
its meeting yesterday, and the plan was approved. The panel will
work out a numerical target to be attained in the next 10 years.

The government has put forth since 2006 the fiscal reconstruction
goal of turning the primary balances of the central and local
governments into the black by fiscal 2011.

Speaking before reporters after the meeting, Finance Minister
Yosano, who also serves as economic and fiscal policy minister,
said: "The attainment of the goal of turning the primary balances
into the black will be delayed to early in 2020."

The delay is attributed to a decrease in tax revenues and an
increase in fiscal disbursements to fund economic stimulus measures
in the wake of the global recession, which broke out last fall. Upon
confirming the need growing for raising the consumption tax, the
government will review ways to forge ahead with fiscal
reconstruction efforts in the process of setting a new target.

ZUMWALT