China has become the world’s second biggest economy and, as a result, the financial ministry has suggested that forecasts will almost certainly be revised in an upwards direction early next year.
Japan’s GDP did not grow at all this year and could actually drop by 6% or more depending on the direction of its economic revisions.
The CIA Factbook, a source of data that many experts use to compare national economies, reported that China’s 2008 GDP was $4.6 trillion and Japan’s was $4.9 trillion. The 2009 numbers are likely to be $4.75 trillion for China and $4.6 trillion for Japan.
China has had a natural advantage over Japan for years. Japan no longer has the world’s largest pool of inexpensive labor. China also has an abundance of natural resources, particularly energy and raw materials like metal. Japan is too small geographically and consequently never had those resources.
However, it will be several decades before China’s GDP can match that of the US. America’s gross domestic product which will be over $14 trillion this year. China will move up on that number relatively quickly if US economic output stays below 2% or 3% and China continues to expand at 10% or better.
247 Wall Street reminds us China is considered likely to pass the US in GDP. But three decades ago, so was Japan.