China tops Japan in GDP

0 CommentsPrint E-mail Global Times, February 15, 2011
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Word that China had overtaking Japan to become the world's second-largest economy rang loud back in August, but full-year Japanese data confirmed Monday exactly by how much.

However, some analysts say the ranking holds little water, as the real measure is per-capita GDP, and the latest figures show that number is still about 10 times higher in Japan than China.

In 2010, Japan's full-year GDP was valued at $5.47 trillion with 3.9 percent annual growth, compared with China, which brought in $5.88 trillion and grew more than 10 percent, according to statistics from both countries.

Responding to the official GDP figures, Japanese Chief Cabinet Secretary Yukio Edano was quoted by the BBC Monday as noting the significant disparity between the nations' per-capita GDPs.

"The important issue for Japan is how to incorporate China's growth, and utilizing our wealth and incorporating China's growth are important for future generations," Edano said. "We are not engaging in economic activities to vie for ranking but to enhance people's lives."

At the rate China is growing, Japan's government predicts that China will overtake the US as the world's largest economy in less than 20 years, though the BBC reported that there are more bold predictions from analysts saying China will surpass the US in a decade.

Some Chinese analysts are a bit more skeptical.

Qu Hongbin, a Hong Kong-based chief economist for HSBC, told the Global Times that it is too early for China to dream about the leading position, especially given its massive population and that per-capita income here is so much smaller than in the US.

"It is not even time for us to brag about being the world's No. 2 economy, because it means nothing if Chinese people's income and social welfare continue lagging behind while the economy leaps forward," Qu said.

Zhou Shijian, a vice dean at the Center for US-China Relations at Tsinghua University, went as far as to say that "GDP is something invented by the US to fool developing countries in order to shake off some responsibilities," Zhou said. "GDP calculation takes into account the product of inward foreign direct investments (FDI), in which developing countries, mainly as the receivers of investments, have great advantages over their developed counterparts."

According to government figures, as of March last year, China's inward FDI exceeded $1 trillion, but Japan's inward FDI at the end of 2009 was only $221 billion.

"On the other hand," Zhou said, "China's outward FDI is inferior compared with Japan's. When judging China's economic status, we should use the gross national product (GNP), which abates the impact of inward FDI and takes outward FDI into account."

A report released by the China Industrial Economical Academe unveiled that Japan's GNP in 2009 was $5.75 trillion, and China's GNP that year was $4.13 trillion.

"Another fact showing China is still behind Japan is that, after the International Monetary Fund's reform in November, China was listed behind the US and Japan in terms of quotas and voting power. This is also more significant than those GDP numbers," Zhou added.

Additionally, Qu said China had achieved its economic surge at the expense of natural resources and the environment, resulting in Beijing adjusting its growth pattern to become more sustainable.

"Rather than merely keeping up its speed, it's time for China to determine the way it rises and the quality of its growth," Qu said, predicting that China's annual economic growth will slow down to around 8 to 10 percent in the next five years.

Zhou added that Chinese people should keep a cool head and be more mindful of challenges.

"The authorities should make more efforts to improve per-capita GDP. They should focus on helping people achieve better livelihoods," he said.

Haruko Yadabe, a Japanese teacher working for an international school in Tokyo, told the Global Times that he believes "The power struggle in Japan's government and problems in the Japanese economy have helped China indirectly. Many politicians here only care about their support ratings, and they ignore long-term development. This is disappointing."

Japan has been stuck in stagnation and deflation for two decades. Decisive economic policy has been lost in the revolving door of the country's top leader, with the country seeing six prime ministers in just five years, CNN reported Monday.

It is facing a demographic tsunami in the future, with the world's fastest-aging population and one of the globe's lowest birth rates. Its Parliament is also struggling to cap its massive GDP-to-debt ratio - the world's highest among developed nations - which is nearing 200 percent, the report added.

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