China passes Japan; now has world's No. 2 economy
TOKYO -- Japan relinquished its 42-year status as the world's second-largest economy to China in terms of nominal gross domestic product on a U.S. dollar basis in 2010, according to Cabinet Office statistics released yesterday.
Japan's nominal GDP -- the total value of goods and services without accounting for inflation -- last year increased 1.8 percent from that of the previous year to 479.22 trillion yen, which was converted to $5.47 trillion.
China's figure was $5.88 trillion. Though Japan's GDP showed a yearly increase for the first time in three years, China's growth rate was larger.
As a result, the Cabinet Office confirmed that China was the world's No. 2 economy after the United States.
In a preliminary report of the nation's real GDP in the October-December quarter in 2010, the seasonally adjusted figure fell 0.3 percent from the same period in the previous year.
On an annual basis, the fall translated to minus 1.1 percent, marking the first negative growth in five quarters.
"As a neighboring country, China's economic progress is welcome. We want to further deepen good relations between Japan and China," Kaoru Yosano, state minister in charge of economic and fiscal policy, said at a news conference.
According to the Cabinet Office forecast, China's GDP will surpass that of the United States by 2025, propelling China into the status of the world's largest economy.
Japan's nominal GDP has not grown since the bubble economy burst in the early 1990s, and the economic gap between Japan and China is projected to widen.
The October-December quarter's negative growth was mainly due to a 0.7 percent contraction in consumer spending, which accounts for nearly 60 percent of GDP.
Partly due to drastically declining tobacco sales after sharp price hikes in October, production of nondurable goods declined 3.6 percent.
The 3.6 percent fall in nondurable goods output could not offset the 3.1 percent rise in durable goods production.
Meanwhile, capital investment increased 0.9 percent in the quarter.
The rate of GDP decline was smaller than the average real GDP decrease forecast by major private think tanks.
Exports fell 0.7 percent, marking the first fall in seven quarters, due to the global economic slowdown and the prolonged rise in the yen's value.
Public works expenditures fell 5.8 percent, marking the fourth-straight quarterly decline.