Always looking to be the first to report a story, news outlets have been falling over themselves to declare China the world’s second-largest economy. Or at least the headline writers for such outlets have.
The Associated Press reported yesterday that China was ‘setting milestone as economy passes Japan’s’, while the Chicago Tribune, sourced from Reuters, also reported over the weekend that ‘China has overtaken Japan to become the world's second-largest economy, the fruit of three decades of rapid growth that has lifted hundreds of millions of people out of poverty.’
Except it hasn’t, or at least not officially and perhaps not yet. Read on, and AP notes that it isn’t exactly clear yet when China will have passed Japan formally until after this year ends, and that it will depend on shifting exchange rates and data reported in different forms by the two governments.
According to AP:
‘Chinese GDP in 2009 was $4.98 trillion and Japan's was $5.07 trillion. In 2010, Chinese GDP was $1.335 trillion for the April-June quarter — a period for which Tokyo has yet to report. China is growing at 10 percent a year, while Japan's expansion this year is forecast at no more than 3 percent.’
Both articles also note that although some in China might appreciate the bragging rights that go with overtaking regional rival Japan (and, according to the World Bank and others, the United States some time around 2025), the fact is that many Chinese are still seeing relatively few of the economic benefits of the country’s consistent double-digit growth, with per capita incomes in China still at about $3,600 compared with Japan’s $37,800. It's a point not lost on Chinese policymakers, with the country's chief currency regulator, Yi Gang, keen to note on being asked about the possibility of the yuan becoming an international currency that China 'is still a developing country, and we should be wise enough to know ourselves.'
Still, the rapid progress has seen more than half a billion Chinese lifted out of poverty since 1981.