China says it tops Japan as No. 2 economy

chart_world_economies_2.top.gifChina's GDP was smaller than Japan's in 2009 but the IMF expects that wont be the case by the end of this year. But China still trails the United States by a wide margin. By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- China has surpassed Japan to become the world's second largest economy, lagging only behind the United States, a Chinese government official said in remarks published on Friday.

Yi Gang, China's chief currency regulator, broke the news in an interview with China Reform magazine, which was posted on the website of his agency, State Administration of Foreign Exchange.

Japan has yet to announce its gross domestic product for the second quarter, however. Many economists also are likely to base official rankings for world economies on annual data. But few doubt that China has already achieved the milestone of becoming the second-largest economy.

In 2009, China's nominal gross domestic product was worth $4.9 trillion, just 3% smaller than Japan's at $5.1 trillion. The United States still has, by far, the world's largest economy. Its GDP was $14.3 trillion in 2009.

China's economy grew at a pace of 11.1% in the first half of the year, Chinese officials said earlier this month, and for the full year, the International Monetary Fund expects the country to post a growth rate of 10.5%.

Meanwhile, the Japanese economy is only expected to rise at a rate of 2.4% for the current year.

"Japan is a mature economy. Like the United States, it is at a frontier of what's possible in terms of economic development and has to rely on innovation to grow," said Todd Lee, managing director of the Greater China division at research firm IHS Global Insight. "China has a lot of room for catch-up growth, which is what we've been seeing for the last 30 years."

Thanks to its significantly larger population and the decision to allow the yuan to trade freely against the dollar, China could eventually top the United States as the world's largest economy.

It will probably be at least a decade before that happens, though. Lee expects China to surpass the United States before 2025, but added that it could happen sooner rather than later if China continues to let the yuan appreciate. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.78%3.79%
15 yr fixed2.98%2.93%
5/1 ARM3.06%2.99%
30 yr refi3.85%3.85%
15 yr refi3.05%3.00%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 18,130.79 50.65 0.28%
Nasdaq 5,099.55 7.46 0.15%
S&P 500 2,121.15 3.46 0.16%
Treasuries 1.94 0.02 1.10%
Data as of 11:42am ET
Company Price Change % Change
Applied Materials In... 20.36 -1.44 -6.59%
Apple Inc 132.73 2.45 1.88%
Microsoft Corp 47.67 -0.20 -0.42%
Bank of America Corp... 15.70 0.05 0.35%
Facebook Inc 82.53 1.00 1.23%
Data as of 11:27am ET
Sponsors

Sections

The tech-heavy index, home to Apple, Facebook and Google, is finally back above 5,000 and at a new all-time high. Some think it could hit soon 6,000. But are investors too enthusiastic? More

A major earthquake was the last thing Nepal needed. Even before one of the country's major fault lines rumbled to life, the country was beset by challenges. More

Microsoft is ending support for Microsoft Server 2003 in July. That means no more patches and upgrades -- and more exposure to hackers. More

A Girl Scouts Cookie Oven rolling out to Wal-Mart, Target, Kmart stores this summer will let you bake those iconic thin mints right at home. More

Imagine having a three-day weekend every week and being paid the same full-time salary. It can be done if your employer offers you the option of a compressed workweek. More