Japan, keen not to be left out of a foreign investment rush into neighbouring China, is stepping up efforts to lure money to its shores by lowering tax b arriers.

Having ratified a 32-year-old tax treaty with the United States in March to spur cross-border investment, Japan is now eyeing similar deals with the Netherlands and several other countries in Europe and Asia.

Behind the move is a worry that Japan, with its savings rate on the decline after a decade of stagnation that the economy pulled out of last year, may be unable to sustain competitive industries without the help of once-shunned foreign money.

Tokyo's treaty with Washington ended double taxation on dividends, royalties and interest payments, and included other measures that could cut tax bills in some cases by as much as 10 percent.

While Japan will lose out on areas such as income from royalties, the government expects the net effect on tax revenue to be neutral and analysts say the longer-term effects on industries could even be positive.

With a goal of doubling the amount of foreign investment it receives in the five years to 2006, Japan is due to start talks to ratify its tax treaty with the Netherlands next week.

Britain and Germany have also shown interest in reviewing their

tax treaties with Japan after the amendment to the Japan-US treaty, a Finance Ministry official said.

One factor seen driving Japan's renewed effort to attract foreign moneyis China.

China drew some $53 billion in foreign direct investment last year and saw economic growth soar as capital spending boomed. Japan's intake paled in comparison at about $21 billion in the year to March 2003.

But given Japan's relative strength in areas such as intellectual property, analysts say it stands a chance of promoting itself as a regional hub for research and development.