Tokyo - China appears to be on the brink of overtaking beleaguered Japan as the world's second-biggest economy after another blistering performance in 2009, analysts said on Thursday.
Asia's two biggest economies look to have ended 2009 in a tight race but China, which grew 8.7% last year, is soon expected to unseat its neighbour from the position it has held for more than 40 years.
"It may have already overtaken Japan in 2009 and, if not, is likely to do so this year," said Brian Jackson, a senior strategist at Royal Bank of Canada in Hong Kong.
China on Thursday reported nominal - unadjusted for inflation - gross domestic product (GDP) for 2009 of 33.5 trillion yuan, or $4.9 trillion at today's exchange rates.
Japan posted nominal GDP of about ¥505.1 trillion, or $5.5 trillion, in 2008 and its economy is expected to have shrunk by roughly 6% last year, reducing the figure to about $5.2 trillion.
"If you look at nominal figures, the Japanese and Chinese economies are now very close to each other in size," said Yoshikiyo Shimamine, chief economist at Daiichi Life Research Institute in Tokyo.
Japan is scheduled to release its 2009 GDP figures on February 15.
With China expected to post another year of strong growth in 2010, Japan seems likely to end this year in third place worldwide as it struggles to cope with renewed deflation and a shrinking population, experts said.
China returned to double-digit growth in the fourth quarter of 2009 with a red-hot expansion of 10.7%.
Trading partners
Without China's boom, Japan's economy would be even more sluggish given that the two are major trading partners, analysts said.
Comparisons between the two countries are complicated by exchange rate fluctuations. If the yen weakens further, that could hasten China's ascent to world's number two behind the United States.
And China could overtake the United States as early as 2020, PriceWaterhouseCoopers said in a report on Thursday, underlining the "seismic change" in global economic power.
By 2030, India could also take third spot to relegate Japan to fourth, the business consultancy said.
But in terms of per capita GDP, China - with a population of more than 1.3 billion people - trails far behind Japan, with about 128 million.
On this basis, China ranked 104th in the world in 2008 with nominal GDP per person of $3 259, while Japan was 23rd at $38 457, according to the International Monetary Fund. Luxembourg was top with $113 044.
Japan's economy staged a stunning recovery from the ashes of the Second World War and in the 1980s it was widely predicted to outstrip the United States.
But it suffered a decade of stagnation after an asset price bubble burst in the early 1990s.
The country plunged back into recession in 2008 as its exports collapsed due to a severe global downturn.
It returned to growth in the second quarter of 2009, exiting a year-long downturn. But the recovery remains fragile with falling consumer prices, high public debt and weak domestic demand all major concerns for policymakers.
China meanwhile has achieved remarkable growth since opening up its economy 30 years ago, growing at an average of more than 9% each year in the three decades since 1978 - three times the world average.
Growth stalled in the second half of 2008 as the global crisis took hold, but rebounded in the latter half of last year thanks in large part to a massive government stimulus package.
- AFP