Here is an article from Bloomberg today which might interest you.
China GDP Surpasses Japan, Capping Three-Decade Rise (Update1)
2010-08-16 08:12:05.77 GMT
By Bloomberg News
Aug. 16 (Bloomberg) -- China surpassed Japan as the world's
second-largest economy last quarter, capping the nation's three-
decade rise from Communist isolation to emerging superpower.
Japan's nominal gross domestic product for the second
quarter totaled $1.288 trillion, less than China's $1.337
trillion, the Japanese Cabinet Office said today. Japan remained
bigger in the first half of 2010, the government agency said.
China led the world out of last year's global recession
with an economy that's more than 90-times bigger than when
leader Deng Xiaoping ditched hard-line Communist policies in
favor of free-market reforms in 1978. The country of 1.3 billion
people will overtake the U.S., where annual GDP is about $14
trillion, as the world's largest economy by 2027, according to
Goldman Sachs Group Inc. chief economist Jim O'Neill.
China's surpassing of Japan "is a marker of its
increasingly dominant role in the global economy," said Eswar
Prasad, a senior fellow at the Brookings Institution and former
head of the China division at the International Monetary Fund.
"The resilience of China's growth during the crisis enabled a
number of other countries, particularly commodity-exporting
economies, to ride on its coattails."
The benchmark Shanghai stock index rose 2.1 percent at the
3 p.m. close today, climbing the most this month.
China overtook the U.S. last year as the biggest automobile
market and Germany as the largest exporter. The nation is the
world's No. 1 buyer of iron ore and copper and the second-
biggest importer of crude oil, and has underpinned demand for
exports by its Asian neighbors.
While China's output was also larger in the fourth quarter
of 2009, Japan's GDP rebounded to exceed China's in the first
quarter, according to data compiled by Bloomberg News. According
to IMF data using purchasing-power-parity calculations to adjust
for exchange-rate differences, China overtook Japan in 2001.
Quarterly comparisons between China and Japan are "a
little tricky because they do not take account of different
seasonal patterns between the two countries," said David Cohen,
head of Asian forecasting at Action Economics in Singapore.
China's economy is cooling as the government trims credit
growth from last year's record $1.4 trillion and discourages
multiple-home purchases to cool surging property prices. July
industrial output rose the least in 11 months, retail sales
growth eased and new loans climbed less than estimated. China
Petroleum & Chemical Corp. said last month that its crude-oil
processing increased at a slower pace in the second quarter as
fuel demand faltered.
The country's property market is beginning a "collapse"
that will hit the nation's banking system, Kenneth Rogoff, a
Harvard University professor and former chief economist of the
IMF, said July 6.
Still, China is on course to overtake the U.S. as the
world's largest economy around 2020, PricewaterhouseCoopers said
in a January report.
With China's growth surging 10.3 percent in the second
quarter from a year earlier and Japan expanding 2 percent, the
"gap is going to widen" in future, said Shen Jianguang, a Hong
Kong-based economist at Mizuho Securities Asia Ltd. "It is not
likely that Japan will retake the No. 2 spot given the likely
Four of the world's top 10 companies by market
capitalization are from China, including PetroChina Co.,
Industrial & Commercial Bank of China Ltd., China Mobile Ltd.
and China Construction Bank Corp.
Agricultural Bank of China Ltd. boosted the size of its
initial public offering to $22.1 billion this month after
selling more stock in Shanghai, making it the world's largest
first-time share sale. The IPO made the nation home to four of
the world's 10 biggest banks by market value, half a decade
after the country's first major state-owned lender went public.
China may be the biggest IPO market in 2010 as companies
are likely to raise 500 billion yuan ($74 billion) in Shanghai
and Shenzhen, PricewaterhouseCoopers forecast last month.
Since introducing free-market policies, China has lifted
300 million citizens out of poverty, according to the United
Nations. The country remains a developing nation, with its per
capita gross national income ranked 127th in the world at $2,940
at the end of 2008, behind Angola and Azerbaijan, according to
the World Bank.
In the first three decades of Communist Party rule before
Deng took power, China's economy was hobbled by the chaos of the
Great Leap Forward, a failed attempt to transform the agrarian
nation into an industrial powerhouse, and the Cultural
Revolution, a decade of political upheaval led by Mao Zedong's
"China has a large population, a weak economic foundation,
relatively few resources and a large poverty population, which
remains our basic situation," Ma Jiantang, head of China's
statistics bureau, said in January. "Therefore, while we take
note of our expanding size of economy and enhancing economic
strength, we should also have a sober understanding that China
remains a developing nation."
China's future influence on the global economy will
increase, said Shen at Mizuho. The country's "double-digit"
expansion will contribute a third of global growth this year,
the Organization for Economic Cooperation and Development said
"Japan had a huge impact on the global commodities market
and foreign direct investment flows in the 1980s" as China is
doing now, Shen said. "The major difference is that China's
population is 10-times bigger than Japan's, its economy is still
growing at above 9 percent per year, and Chinese investors are
just beginning to invest abroad. You can imagine that China's
impact will be so much bigger."