China is set to overtake Japan as the world’s second-largest economy in a resurgence that is changing everything from the global balance of military and financial power to how cars are designed.
By some measures it has already moved to second place after the US in total economic output -- a milestone that would underline a pre-eminence not seen since the 18th century, when the Middle Kingdom last served as Asia's military, technological and cultural power.
China is already the biggest exporter, auto buyer and steel producer, and its worldwide influence is growing. The fortunes of companies from Detroit automakers to Brazilian iron miners depend on spending by China's consumers and corporations. And rising wealth brings political presence: Chinese pressure helped to win developing countries a bigger voice in the World Bank and International Monetary Fund.
“Japan was the powerhouse driving the rest of Asia,” said Rob Subbaraman, chief Asia economist for Nomura Securities. “Now the tide is turning and China is becoming a powerful influence on the rest of Asia, including Japan.”
China’s rise has its contradictions. The wealth gap between an elite who profited most from three decades of reform and its poor majority is so extreme that China has dozens of billionaires while average income for the rest of its 1.3 billion people is among the world’s lowest.
Exactly when China passes Japan formally will be unclear until after this year ends. It depends on shifting exchange rates and data reported in different forms by the two governments.