China Overtakes Japan as World’s Second-Biggest Economy
August 16, 2010 by staff
China Overtakes Japan as World’s Second-Biggest Economy, China overtook Japan as the second largest economy in the second quarter of this year, marking another milestone in transforming the country from the impoverished communist state to economic superpower.
With its red-hot economy growing at around 9% a year, some experts now expect China to overtake U.S. as early as 2030, its financial strength to carry large political implications.
Official figures published today show a faltering Japanese economy grows by 0.1% in the three months to June, with a GDP of $ 1.28tn (£ 826bn) eclipsed by China’s economic output and no 1.33tn.Although is the first time, China has overtaken Japan in a single quarter, most economists now expect the economy emerging at the end of the year ahead firmly.
Nick Parsons, head of research at National Australia Bank, said the global financi
the spectacular growth of China since Deng Xiaoping began introducing free market reforms three decades ago has been jumping the world league of economic power. Just 10 years ago, was the sixth largest in the world, but has since surpassed Britain and France in 2005 and Germany in 2007. It overtook Germany as top exporter in the world last year and also became the largest car market.
John Hawksworth, chief economist at PricewaterhouseCoopers, described the figures as “symbolic” of the moment. He said: “Clearly it was inevitable, was only a matter of when it would happen – as is quite inevitable in the long run it will be bigger than the U.S. as well, since it has four times the population. ”
For now, China remains a distant second behind the U.S.. The International Monetary Fund expects China’s GDP to reach and 5.36tn this year, while the U.S. and is expected to reach 14.79tn. The projection and the United Kingdom is 2.22tn. It is expected that Japan has a GDP of $ 5.27tn.
al crisis, which launched the most developed economies in recession, has emphasized the changing global power. “The Chinese economy has more than doubled in size in the last 10 years and will double in size again within the next 10 and do not think the financial crisis has accelerated the change as much as it has built,” he added.
For Japan, the figures reflect the continuing decline of a nation that has occupied the second place since 1968 when they beat West Germany, the result of a significant increase as manufacturing and financial giant following the Second World War.
But the “economic miracle” juddering stopped in the early 1990s when a burst property bubble. What followed was a decade lost in the crisis and the country has never fully recovered. Today, faced with deflation, an aging and declining population and only minimal growth.
Economists said the figures as evidence that the global recovery continues to face strong headwinds.
China’s breakneck growth has not come without cost, causing enormous social disruption, including large-scale migration from rural areas to cities that are growing at an unprecedented rate. McKinsey consulting firm estimated that China’s urban population will nearly double by 2025, when 221 cities have populations over 1 million, compared with 35 in Europe. China has continued to grow during the recession, partly due to a 586bn stimulus package.
The headline growth figures also hide wide disparities of income in China, which has a population of 1.3 million dollars, the UN estimates that 300 million have been lifted from poverty since the reforms began, but as the spring of boutiques Luxury hotels in Shanghai and Beijing, hundreds of millions of people still live in serious difficulties, particularly in rural areas. Japanese people are still among the richest in the world with a GDP per capita of 39 700 and 46 400 compared with U.S. and and only 3,600 in China.
The rapid advances of China have also led to environmental problems: in 2006, the country surpassed the U.S. as the largest emitter of greenhouse gases. This month, Beijing ordered more than 2,000 highly polluting, dangerous and inefficient power plants to close within two months, underlining how the one-party system can handle the sudden change.
China’s growth has left hungry for natural resources and energy, increasing the cost of commodities and the increased potential for conflict. It has been busy doing trade agreements in Africa, Latin America and Asia, without the kind of human rights and demands reform often attributed to the west. U.S. has already blocked an attempted coup of a U.S. oil company by a rival state-controlled Chinese while Australia has prevented mineral companies that buy from China.
There are also concerns that the global economy is unbalanced, with huge trade deficits between China and the developed world. China are said to be four-fifths of the world’s toys and almost three fifths of their clothes. The developed economies are hoping that China will become a market for their products and services as its consumer market grows, but currently represents only 2% of UK exports. Critics of the U.S. and Europe argue that China is unfairly benefiting because it keeps its currency, the yuan, artificially low, benefiting exporters.
According to a different measure, using the purchasing power instead of the current exchange rate, China has already overtaken Japan.
Hawksworth said that China’s growth will begin to decline gradually to about 3.5% to 4% within 20 years. This is partly due to an aging population due to its one-child policy and rising wage pressures and a growing reliance on domestic demand as exports slow. Recently there have been a series of high profile attacks Honda and other factories in southern China, as workers demand better wages and conditions, while a series of suicides at Foxconn, which makes iPhones and other Apple products, has concern and led to higher wages.
However, Hawksworth said the growing political power that has come with China’s economic growth was already evident: “It is evident in a number of forums Copenhagen climate talks for the G-20, which in fact can not be reach a sensible solution, without giving considerable weight to China. “
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