The chief of Japan's aid agency has said that China's development was in Japan's own interest, a day after Tokyo delayed fresh loans to its giant neighbor due to political strains.

"The stable development of this huge neighboring country is a matter of interest to Japan and will benefit Japan," Sadako Ogata, head of the Japan International Cooperation Agency (JICA), said as she wound up a China visit.

"Some Japanese have a kind of worry over Chinese development. But it is important that we will develop together," the former chief of the UN refugee agency said, as quoted by Jiji Press news agency.

Her comments came a day after Japan's government said it had delayed approval of new loans to China due to rising tensions, upsetting Beijing which appealed for talks to resolve the issue.

The move may delay the disbursal of funds to China in the fiscal year starting in April, giving Japan leverage amid the bilateral disputes.

Ogata is a widely respected figure in Japan and has turned down offers to join Prime Minister Junichiro Koizumi's government.

Japan provides about 90 percent of its official aid to China in soft loans rather than grants or technical assistance.

Ogata's agency is in charge of providing technical assistance, which amounted to 5.9 billion yen (50 million dollars) for the fiscal year ended in March 2005.

Bilateral relations between the Asian neighbors have steadily deteriorated, with China furious at Koizumi's visits to a shrine honoring war dead that includes World War II criminals.