After three decades of spectacular growth, China passed Japan in the second quarter to become the world's second-largest economy behind the US, according to government figures released on Monday.
The milestone, though anticipated for some time, is the most striking evidence yet that China's ascendance is for real and that the rest of the world will have to reckon with a new economic superpower.
The recognition came, when Tokyo said that Japan's economy was valued at about $1.28 trillion in the second quarter, slightly below China's $1.33 trillion. Japan's economy grew 0.4 per cent in the quarter, Tokyo said, substantially less than forecast. That weakness suggests that China's economy will race past Japan's for the full year.
According to experts, unseating Japan — and in recent years passing Germany, France and Great Britain — underscores China's growing clout and bolsters forecasts that China will pass the US as the world's biggest economy as early as 2030. America's gross domestic product was about $14 trillion in 2009.
"This has enormous significance," said Nicholas R. Lardy, economist, Peterson Institute for International Economics. "It reconfirms what's been happening for the better part of a decade: China has been eclipsing Japan economically. For everyone in China, they're now the biggest trading partner rather than the US or Japan."
For Japan, whose economy has been stagnating for more than a decade, the figures reflect a decline in economic and political power. Japan has had the world's second-largest economy for much of the last four decades, according to the World Bank. And in the 1980s, there was even talk about Japan's economy overtaking that of the US.
But while Japan's economy is mature and its population aging, China is in the throes of urbanisation and is far from developed, meaning it has a lower standard of living and room to grow. Five years ago, China's GDP was $2.3 trillion, about half of Japan's.
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