Japan confirms China surpassed its economy in 2010

[Lankan Ranger]

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Japan confirms China surpassed its economy in 2010

Japan confirmed Monday that China's economy surpassed its own as the world's second largest in 2010 and said a late-year downturn was Japan's first quarterly contraction in more than a year.

Japan's real GDP expanded 3.9 percent in the calendar year in the first annual growth in three years, but it wasn't enough to hold off a surging China. Japan's nominal GDP last year came to $5.4742 trillion, less than China's total of $5.8786 trillion, the Cabinet Office said.

Gross domestic product shrunk at an annualized rate of 1.1 percent in the October-December quarter, a sharp reversal from a revised 3.3 percent expansion in the third quarter, the government said.

A slowdown in exports and weaker consumer demand at home led to the unsurprising downturn, which is expected to be temporary. The result was better than Kyodo news agency's average market forecast of an annualized 2.2 percent decline.

China was acknowledged last year as having grown to the world's second-largest economy, but the Japanese data confirming it were not available until Monday. The switch underscores the nations' stark contrasts: China is growing rapidly and driving the global economy, while Japan is struggling with persistent deflation, an aging population and ballooning public debt.

Prime Minister Naoto Kan has pledged to revive the economy and make major reforms in the country's tax and social welfare systems.
His approval ratings are eroding quickly, however, as voters question his government's ability to lead the country through its pressing problems.

The fourth-quarter figure translates to a 0.3 percent fall from the previous three-month period, according to the Cabinet Office's preliminary data. Consumer spending, which accounts for some 60 percent of GDP, fell 0.7 percent. Auto sales slumped during the quarter after government subsidies for "green" vehicles expired in September.

Exports fell 0.7 percent from the previous quarter amid a strong yen and waning global demand. A rise in the Japanese currency reduces the value of exporters' profits overseas and makes Japanese goods pricier in foreign markets.

The road ahead looks brighter, with economists saying GDP will expand this quarter in tandem with global growth. The head of Japan's central bank, Masaaki Shirakawa, said last week that that recent signs indicate Japan is emerging from the "pause" and performing at par with other advanced economies.

Ryutaro Kono, chief economist at BNP Paribas in Tokyo, says exports and production have escaped their "soft patches."

"The economy seems to be recovering again from December, so the negative growth in (the fourth quarter) need not become the basis for pessimism about Japan's cyclical outlook," he said in a report this month.

Japan confirms China surpassed its economy in 2010

[Chinese-Dragon]

No big deal, our GDP per capita is still low. We have a LONG way to go before we become a developed country.

In the words of Deng Xiaoping... "Keep a cool head, and maintain a low profile".

[Water Car Engineer]

^^^^

Thanks for the quote, heard it like 500 times.

And good job China for the achievement.

[CardSharp]

^^^^

Thanks for the quote, heard it like 500 times.

And good job China for the achievement.

Something you people don't hear enough apparently.

[Water Car Engineer]

Something you people don't hear enough apparently.

You people as in Indians on defense forums or on video sharing sites?

[Chinese-Dragon]

^^^^

Thanks for the quote, heard it like 500 times.

And good job China for the achievement.

Good advice never gets old.

[CardSharp]

You people as in Indians on defense forums or on video sharing sites?

People on this forum, your media etc.

[Echelon]

China has overtaken Japan as the world's second-biggest economy.

Japan's economy was worth $5.474 trillion (£3.414 trillion) at the end of 2010, figures from Tokyo have shown. China's economy was closer to $5.8 trillion in the same period.

Japan has been hit by a drop in exports and consumer demand, while China has enjoyed a manufacturing boom.

At its current rate of growth, analysts see China replacing the US as the world's top economy in about a decade.

"It's realistic to say that within 10 years China will be roughly the same size as the US economy," said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.

Overseas risk

Japan played down the significance of the shift in the economic league table, and the fact that it has been replaced as the second-largest economy for the first time in more than four decades.

"As an economy, we are not competing for rankings but working to improve citizens' lives," said Economics Minister Kaoru Yosano.

The minister added that China's booming economy was welcome news for Japan as a neighbouring country.

China is now Japan's main trading partner and is increasingly important to companies such as electronics firm Sony and carmakers like Honda and Toyota.

However Mr Yosano said that Japan needed to closely watch "risks from overseas economies and currency moves".

Negative demand

The yen has been strengthening against other currencies, recently touching a 15-year high against the dollar, and the fear is that the currency's gains may hurt foreign demand for Japanese products.



According to the latest figures from Tokyo, Japan's economy contracted at an annualised rate of 1.1% in the final three months of 2010. Growth declined 0.3% from the previous quarter.

It was the first time in five quarters that the economy contracted and it was caused by a dip in domestic and export demand, analysts said.

Consumer spending fell 0.7% in the final three months of 2010, the figures showed.

Analysts said that while demand has been picking up since the start of the year, there will not be a sudden revival in Japan's economic fortunes.

Not least because government plans to boost consumer spending by giving incentives to buy products such as consumer durables had either finished or were about to end.

"The main reasons for the contraction are the expiry of government stimulus measures and negative external demand," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"It is going to be difficult for the economy to emerge from a lull in the January-March period.

"We are unlikely to see the economy worsen, but the recovery will not be strong enough for people to actually feel it is happening."

'Lost decade'

Japan has been struggling to come to terms with what many analysts call the "lost decade" of the 1990s when a property market and asset crash turned the economy on its head.

Domestic demand tumbled and exports also dropped as consumers looked for cheaper products from other emerging markets, and China in particular.


Today, Japan's biggest headaches are an aging population that is spending less, and a workforce that is relatively expensive and inflexible to operate.

By contrast, the majority of China's growth has been funded by a long-running manufacturing boom and the subsequent expansion of its domestic industries and infrastructure.

"There was an emphasis on infrastructure," said Duncan Innes-Ker of the Economist Intelligence Unit (EIU) in Beijing.

"They were building way ahead of where people thought the demand would be. And because the infrastructure was there, companies went there."

Whole picture

Most economists agree that while China as a whole is growing, and the average person is getting wealthier, comparing only the size of its economy to Japan's does not paint an accurate enough picture.

"GDP per head in China is about $4,500, but in Japan it's about $40,000 per head," said Mr Miller of GK Dragonomics.

"Most people in China are still poor, more people live in the countryside than in cities. The average Japanese person is much much richer than the average Chinese person."


BBC News - China overtakes Japan as world's second-biggest economy

[cross1993]

Japan is also leading many of our. That is the real power.

[blackops]

Well congo to you thete is 1 think i want to say if you guys would not have been there i would have still buying. My radio control planes for 300-400 $ now i get in half the price with a waranty and enough spare party keep it up ( sorry fpr of topic statement )

[prototype]

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China overtook Japan in the starting of 2010 itself i think,why Japanese confirmed it so late,they were not aware yet?