China Becomes World's Second Largest Economy
It emerged yesterday that the economy of China had overtaken that of Japan to become the second largest in the world. China’s economy was worth $5.8 trillion dollars through 2010, whilst Japan’s weighed in at $5.4 trillion. These figures show Japan as slipping down from second place in the world rankings for the first time since 1968.
China’s economic ascendancy has been one of the most remarkable international issues of the last two decades and analysts have been predicting this milestone for quite some time. The country’s economy has enjoyed major injections of foreign investment into its manufacturing sector in recent times, one of the primary causes of this powerful growth. Conversely, Japan has suffered from falling exports and stagnation since rising to economic prominence in the 1970’s and 80’s.
The Japanese government played down any negative implications of the shift however, suggesting their focus was on improving things for their citizens domestically and that having a strong trading partner in China will help that. "For a neighbour country like us, it is something to celebrate that the Chinese economy is making a leap forward," urged Japanese Economics Minister Kaoru Yosano, “We'd like to further deepen good, friendly relationships between Japan and China.”
The question many are now asking is when China will be able to challenge the USA for economic dominance. The US economy is three times the size of China’s yet some are predicting China could catch up within a mere 10 to 15 years, especially with the US economy suffering in the aftermath of the financial crisis.