Power shift as Chinese economy tops Japan
Published 17/08/2010 | 08:00
Japan lost its place as the world's second biggest economy to China after posting dismal growth figures which have added to evidence of a stunted global recovery.
The Japanese government revealed the country's GDP grew at an annualised rate of just 0.4% in the second quarter, far below the 4.4% growth seen in the first quarter, and the 2.3% expected by economists.
The figures saw Japan's economy slip to third place by size behind China - its economic output in the second quarter was $1.29tn, compared with Chinese economic output of $1.34tn in the same quarter.
The figures underscore China's emergence as a major economic power - it is already the biggest exporter, auto buyer and steel producer in the world.
China has been a major force behind the world's emergence from deep recession, feeding its growing demand with exports from the US, Japan and Europe.
But economists warned the latest figures from Tokyo showed Chinese demand alone may not be enough for major economies, including the UK, to rely on.
Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo, said: "Japan is the canary in the goldmine because it depends very much on demand in Asia and China, and this demand is cooling quite a bit. This is a warning sign for all major economies that focusing on overseas demand won't be sufficient."
China's economy will almost certainly be bigger than Japan's at the end of 2010 because of the huge difference in each country's growth rates - China is growing at about 10% a year, while Japan's economy is forecast to grow between 2 to 3% this year.
Since the early 90s, Japan has seen stagnant growth, from which the country never really recovered. In contrast, China's growth has been spectacular,.
Japan's population is still among the world's richest, with a per capita income of $37,800 (£24,233) last year, compared with China's $3,600 (£2,307).
Germany and the US recently reported far superior GDP figures for the same period. Germany registered a 2.2% rise, while the US economy grew at an annualised rate of 2.4%. The UK posted a 1.1% rise for the same period.