Tuesday, February 15, 2011
China overtakes Japan
I am wearing NIKE t-shirt which cost CNY 3 or MYR 1.5 or USD 0.50.
China overtakes Japan to become world's second biggest economy (and will power ahead of U.S. in a decade)
Last updated at 12:11 AM on 15th February 2011
* Japan relinquishes second place after more than 40 years
* China gross domestic product is £3.66trillion to Japan's £3.4trillion
China is closing in on America as the world’s biggest economy.
Japan lost its second place ranking after more than 40 years, it was revealed today.
And if the Chinese carries on its 10 per cent a year growth it will replace the US as the world’s economic top dog in the next decade, according to financial analysts.
As growth in the US slows to a virtual standstill – with President Obama today announcing billions of pounds worth of cuts over the next decade - China’s economy is revving into double digits.
Battle: Japan dropped into third place after being in second for more than 40 years
In purely dollar terms, it is going to take a while for China’s £3.7 trillion economy to catch up with America’s £9.4 trillion output.
* Boehner warns: 'We're broke' as Obama plans to increase speed of spending cuts to $1.1trillion
But in sheer purchasing power, taking into account the goods and services a country actually buys at home, China is well on its way to outstripping its fading competitor.
Data from Japan’s cabinet office showed yesterday that it fell behind China in the final quarter of last year with a gross domestic product of £3.4 trillion.
Weak consumer spending in Japan and a strong yen added to Tokyo’s problems with deflation and growing debts.
But although China is growing at breakneck speed, on many measures it is still a far poorer country than the U.S., Japan and other developed nations.
Gross domestic product per person in China is less than £2,700 - just a tenth of its powerhouse Japanese neighbour.
'It's realistic to say that within 10 years China will be roughly the same size as the U.S. economy,' said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.
'But most people in China are still poor, more people live in the countryside than in cities. The average Japanese person is much much richer than the average Chinese person.'
Japan's economics minister Kaoru Yosano said the country needed to take advantage of China's growth to boost trade.
'The fact that China's economy is booming is welcome news for Japan as a neighbouring country,' he said. 'We want to deepen the amicable relationship between Japan and China. As an economy, we are not competing for rankings but working to improve citizens' lives.'
China is the number one destination for Japanese goods with nearly 20 per cent of its exports going to its Asian neighbour.
The International Monetary Fund predicts growth of nearly 10 per cent in China this year and around 9.5 per cent a year for the foreseeable future.
Japan, by contrast, is expected to grow by just 1.5 per cent to 2 per cent a year.
Duncan Innes-Ker, an economist at the Economist Intelligence Unit, said: ' This is a historic landmark, but China still has a long way to go.
'This signals the growing importance of China for the global economy and the tremendous progress that the country has made over the last three decades of reform.
' However, GDP per head is still low, and rapid growth could continue for many years to come.'
Japan has not fully recovered from the so-called 'lost decade' of the 1990s when the property market crashed and the economy stagnated.
Domestic demand tumbled and exports also dropped as China and other developing countries flooded the world with cheap goods.
The Japanese economy shrank by 0.3 per cent in the final quarter of 2010, according to official figures published in Tokyo yesterday. It was the first contraction in five quarters.
Posted by MSMZ at 3:45 AM