China overtakes Japan in 2Q as No. 2 economyAug 16th, 2010 | By admin | Category: Featured
Japan’s nominal GDP, which isn’t adjusted for price and seasonal variations, was worth $1.286 trillion in the April-to-June quarter compared with $1.335 trillion for China. The figures are converted into dollars based on an average exchange rate for the quarter.
Faced with feeble growth, Japan’s government is considering fresh stimulus measures to support the economy, likely including ways to boost consumer spending on eco-friendly products, Kyodo News agency said late Monday, quoting unnamed government sources.
Japan has held the No. 2 spot after the U.S. since 1968, when it overtook West Germany. From the ashes of World War II, the country rose to become a global manufacturing and financial powerhouse. But its so-called “economic miracle” turned into a massive real estate bubble in the 1980s before imploding in 1991.
What followed was a decade of stagnant growth and economic malaise from which the country never really recovered. Prime Minister Naoto Kan now faces a long list of daunting problems: a rapidly aging and shrinking population, persistently weak domestic demand, deflation, a strong yen and slowing growth in key export markets.
In contrast, China’s growth has been spectacular, its voracious appetite fueling demand for resources, machinery and products from the developing world as well as rich economies like Japan and Australia. China is Japan’s top trading partner.
China’s rise has produced glaring 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.
Japan’s people still are among the world’s richest, with a per capita income of $37,800 last year, compared with China’s $3,600. So are Americans at $42,240, their economy still by far the biggest.
“We should be concerned about per capita GDP,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. China overtaking Japan “is just symbolic,” he said. “It’s nothing more than that.”
But the symbolism may be exactly the “wake-up call” Japanese leaders need, said Schulz of the Fujitsu Research Institute. “Japan is always strangely inward looking,” he said. “And nobody is doing anything about it.”