China’s growing military strength and its tense relationship with Taiwan are major destabilising factors in East Asia, according to a strategy report issued yesterday by a think tank affiliated with Japan’s Defence Ministry.

Ties between Japan and China are at their worst state in decades, strained by disputes including Prime Minister Junichiro Koizumi’s annual visits to Tokyo’s Yasukuni shrine. Beijing sees the shrine as a symbol of Japan’s past militarism because it honours convicted war criminals along with the country’s war dead.

<B>Advocate of friendly relations</B>

Koizumi strongly criticised China’s stance yesterday, saying the shrine issue should not stand in the way of summit meetings between the two nations.

“I still don’t understand why China and South Korea criticise my visits to Yasukuni,” Koizumi told reporters. “I am an advocate of friendly relations with China and South Korea.”

Koizumi reiterated that he visits the shrine to pray for peace and honour the dead, not to glorify militarism.

In an annual report on East Asian strategy, the National Institute for Defence Studies, a government-funded think tank, warned of China’s military buildup and its growing pressure on Taiwan under independence-minded President Chen Shui-bian. “As the modernisation of China’s armed forces has been making headway, many observers take the view that the military balance between China and Taiwan is shifting in China’s favour,” the report said.

“The murky relations between China and Taiwan, and an increase in China’s military muscle, can be seen as major destabilising factors in East Asia,” it added.

China’s 2.3 million-strong People’s Liberation Army is the world’s largest standing military, and Beijing said earlier this month that its official defence budget would rise to 283.8 billion yuan ($35 billion) in 2006, up 14.7 percent from 2005.

The nation’s military spending has risen by double-digit percentages for the last few years, but US and Japanese defence officials say China actually spends more on military equipment and forces than the official budget shows.

<B>Diplomatic furore</B>

In December, Japanese Foreign Minister Taro Aso set off a diplomatic furore when he said China’s military buildup was a threat given its lack of transparency, prompting an angry response from Beijing and further straining ties.

The report said China has increased the number of short-range ballistic missiles deployed in coastal areas bordering on the Taiwan Strait and that military exercises – including a first-ever cooperative exercise between Russia and China last year — appear conceptually aimed at Taiwan.

“Although Beijing seeks to unify Taiwan with mainland China by peaceful means, it continues to modernise its nuclear and missile capabilities, and its naval and air forces, to enable it to prevent Taiwan from becoming independent,” it said.

China is trying to pursue a strong regional leadership role through forming an East Asian community and trade agreements with Southeast Asian nations, but the report said its relationship with Japan remains in a stalemate.

Describing bilateral ties as “cold politically while warm economically”, the report said the Chinese government’s hands are tied by widespread anti-Japanese sentiment among the Chinese public due to bitter memories of Japan’s invasion and occupation of parts of China before and during World War Two. Relations between Tokyo and Beijing have sharply deteriorated since Koizumi took office in 2001 and began annual visits to Yasukuni shrine.

China has repeatedly said the visits are one of the biggest blocks to bilateral ties, prompting Koizumi to repeat his criticism of Beijing’s stance on Monday.

“It makes no sense for China not to hold summit meetings because of the visits to Yasukuni,” Koizumi told a parliamentary committee.

The two nations are also at odds over energy resources in the East China Sea.