News today that Japan will finally stop shelling out development aid to China after half a century of multi-billion-yen grants and concessionary loans marks a watershed, and not just in Sino-Japanese relations.

Tokyo's decision to turn off the aid tap by the time of the Beijing Olympics in 2008 reflects China's sprinting economic growth and double-digit increases in defence spending. Japan has long chafed at subsidising its giant neighbour as cheap Chinese imports flood its markets and Beijing continues to thumb its nose at Tokyo's quest for a permanent seat on the U.N. Security Council.

But confirmation that the world's second-biggest aid donor is halting handouts to the planet's fastest-growing economy also underlines China's astonishing progress from a receiver of assistance to a major new player in the aid game.

Just how astonishing has that progress been? In 2005, China stopped receiving food aid from the U.N. World Food Programme. In the same year, it became the world's third-largest giver of food aid. That's a remarkable transformation from begging bowl to cup of plenty.

Japanese official development assistance (ODA) to China began in the 1950s as an unofficial form of war reparations. Japan itself received ODA after the war, using cheap U.S. loans to rebuild infrastructure and fuel its own meteoric economic growth in the 1960s. Since then, it has tried to replicate the model in other countries including China.

These days, China has itself become a major contributor of humanitarian and development assistance, proving you don't have to be in the exclusive club of Organisation for Economic Cooperation and Development nations to do overseas aid.

To see how new donor China is setting the cat among the pigeons, look at Africa, which gets the largest slice of China's overall ODA - about $1.8 billion a year. Beijing aims to double that by 2009.

That figure come from "China in Africa", a new book by Chris Alden that catalogues Beijing's growing influence on the continent.

According to Alden, Chinese aid to Africa is typically "tied", meaning it comes with stipulations that Chinese companies and workers be used in development and infrastructure projects. That partly explains why the Chinese expatriate population is swelling in much of Africa.

At the same time, China's economic, trade and diplomatic clout is growing by the day. Two-way trade with Africa was worth more than $50 billion in 2006 (again, China aims to double that by the end of the decade). More than 800 Chinese companies are doing business in about 50 African countries.

Some 40,000 Chinese workers have settled in Angola, China's top African trading partner and biggest overall supplier of petroleum imports (18 percent).

From Algeria to Zimbabwe, China has major investments in energy, mineral and timber interests. China has a 40 percent stake in the Sudanese government's Greater Nile Petroleum Corp and has invested more than $15 billion in the country since 1996.

All of which is a worry for Japan, which is all too aware of the importance of African votes in getting that coveted U.N. Security Council seat. Tokyo frets that if Beijing gets too cosy with Africa, it will lose crucial influence.

China's expanding presence in Africa also discombobulates traditional Western donors alarmed that Beijing's policy of "no political strings" could derail efforts to promote better governance on the continent.

China's reluctance this year to back the presence of international peacekeepers in Sudan's war-torn Darfur region without Khartoum's nod prompted critics to accuse Beijing of abetting genocide and call for a boycott of the Olympics.

Many experts describe China's involvement with Africa as a double-edged sword, helping to bring much-needed cash and infrastructure yet bolstering unsavoury regimes and turning a blind eye to human rights abuses.

"China's willingness to publicly parade its policy of 'no conditions' has challenged the international consensus on governance and development agreed upon at (the 2005 G8 Summit at) Gleneagles just as it was on the point of being implemented," writes Alden.

For better or for worse, China is the new kid on the block and cannot be ignored. Japan's decision to stop development assistance merely underlines the shifting balance of power in international aid and development.

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