China Becomes World’s Number 2 Economy
August 16, 2010 Leave a comment
By TOMOKO A. HOSAKA | Associated Press Writer
China overtakes Japan in 2Q as world’s No. 2 economy amid slowdown in recovery.
Japan lost its place as the world’s No. 2 economy to China in the second quarter as receding global growth sapped momentum and stunted a shaky recovery.
Gross domestic product grew at an annualized rate of just 0.4 percent, the government said Monday, far below the annualized 4.4 percent expansion in the first quarter and adding to evidence the global recovery is facing strong headwinds.
The figures underscore China’s emergence as an economic power that is changing everything from the global balance of military and financial power to how cars are designed. It is already the biggest exporter, auto buyer and steel producer, and its global influence is expanding.
World stock markets mostly fell Monday on Japan’s second-quarter figures. Japan’s benchmark Nikkei 225 stock index fell 0.6 percent, hovering close to a 13-month low. In Europe, the FTSE 100 index of leading British shares was down 0.6 percent while France’s CAC-40 fell 1 percent. Germany’s DAX, however, was up 0.1 percent.
In early morning trading on Wall Street, the Dow Jones industrial average fell 60.02, or 0.6 percent, to 10,242.83.
China has been a major force behind the world’s emergence from deep recession, delivering much-needed juice to the U.S., Japan and Europe. Tokyo’s latest numbers, however, suggest that Chinese demand alone may not be enough for Japan or other economic giants.
“Japan is the canary in the gold mine because it depends very much on demand in Asia and China, and this demand is cooling quite a bit,” said Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo. “This is a warning sign for all major economies that just focusing on overseas demand won’t be sufficient.”
China has surpassed Japan in quarterly GDP figures before, but this time it’s unlikely to relinquish the lead.