By Chris Hogg
BBC Japan correspondent
The Japanese government has spent some time mulling over how best to respond to last month's crackdown by the Burmese authorities.
The crackdown on protesters in Burma has alarmed the world
Tokyo feels it is in a unique position when it comes to dealing with Burma.
Officials believe they have better access to the generals that run the country than other rich nations like Britain or the United States.
They argue this allows them to be more forthright in their discussions with Burma's leaders behind closed doors.
They believe they have built up political capital with the Burmese government over many years, by supplying grants and technical assistance to the country.
They do not want to squander that influence by cutting off aid completely.
They are no doubt worried that if that happened, their rival in the region, China, would step in and benefit.
On the other hand they say they want there to be no misunderstanding. The decision to cut around a fifth of the aid they supply to Burma sends a serious message.
In discussions with the Burmese they say they have made it clear why they are withdrawing these funds - saying they deem the brutal suppression of the pro-democracy protests as being unacceptable.
So it looks like they are trying to have it both ways. The money was to have been used to build a facility at a university in Rangoon where students would learn Japanese and study Japan's economic system.
Japan feels that withdrawing support for the project will not harm ordinary Burmese.
Japan believes it has better access to Burma's generals than the US
And other aid projects will continue, including efforts to help children with polio and to prevent infant mortality.
Government bureaucrats from Burma will still be allowed to travel to Japan to study.
Tokyo argues these contacts help it to exert a positive influence over the country's future leaders.
And it is also true that Japan does not help Burma as much as it used to. It cut its aid by about 60% several years ago in protest at the detention of the pro-democracy leader Aung San Suu Kyi.
Tokyo is not the country's biggest trade partner. Japan says when it comes to total investment, eight other countries did more business with the Burmese last year, including Britain, the United States and the Netherlands.
Burma's biggest trading partners are its neighbours - countries like Thailand and China.
It is those countries and others in the regional grouping Asean who many believe are best able to exert influence over Burma's military junta.