China becomes world’s second-largest economy

http://www.financialpost.com/China+becomes+world+second+largest+economy/3403745/story.html

Bloomberg News · Monday, Aug. 16, 2010

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 US$1.288-trillion, less than China’s US$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 US$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.”…

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.

“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.”

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