China Moves to World’s No. 2 Economy as Japan’s GDP Decreases

After 42 years of being in the number two spot following behind the US, China overtook Japan’s spot.  China’s GDP has increases a great deal, while Japan’s GDP has been decreasing due to several reasons.  Prime Minister of Japan, Naoto Kan is trying

The Japanese economy’s fall from its 42-year reign in the number two spot behind the US comes as pressure is mounting on Prime Minister Naoto Kan to halt further decline. But merely achieving moderate growth ahead may prove difficult as the government grapples with a staggering public debt, prolonged deflation and low approval ratings.

Japan’s nominal GDP for 2010 was Y479.223 trillion, or $US5.474 trillion ($5.465 trillion), falling below the $US5.879 trillion figure for China in the same year.

While China overtakes Japan, it is also helping it along. Japanese exports to China hit a record Y13.087 trillion in 2010. The rapidly growing Chinese market for everything from cars and high-tech electronics to beverages is galvanising corporate Japan.
Naoki Izumiya, president of the beer-maker Asahi Breweries, said last week that the company’s business in China has “increasing potential and appeal,” a remark that rings true for various Japanese firms.

Mizuho Research and Consulting senior economist Norio Miyagawa said he now expects full-year 2011 growth of less than 2 per cent. “Japan’s weak consumer spending will likely keep weighing on the economy,” he said.

Economy Minister Kaoru Yosano put the issue of China’s growing economic clout growth in a positive light, saying that its high growth rate benefits all of Asia.

The fall in exports came as the yen surged during the period, making Japanese goods more expensive overseas and eating into profits sent back to Japan.

Tokyo intervened in currency markets for the first time in more than six years in September, but the attempt failed. In early November, the US dollar sank to Y80.21, its lowest level in fifteen years and near the post-World War II record low of Y79.75.