Chinese economy set to pass Japan’s

by
August 1, 2010

By Joe McDonald-Associated Press

BEIJING (AP) — China is set to overtake Japan as the world’s second-largest economy in a resurgence that is changing everything from the global balance of military and financial power to how cars are designed.

By some measures it has already moved to second place after the U.S. in total economic output — a milestone that would underline a pre-eminence not seen since the 18th century, when the Middle Kingdom last served as Asia’s military, technological and cultural power.

China is already the biggest exporter, auto buyer and steel producer, and its worldwide influence is growing. The fortunes of companies from Detroit automakers to Brazilian iron miners depend on spending by China‘s consumers and corporations. And rising wealth brings political presence: Chinese pressure helped to win developing countries a bigger voice in the World Bank and International Monetary Fund.

Japan was the powerhouse driving the rest of Asia,” said Rob Subbaraman, chief Asia economist for Nomura Securities. “Now the tide is turning and China is becoming a powerful influence on the rest of Asia, including Japan.”

China‘s rise has produced glaring contradictions. The wealth gap between an elite who profited most from three decades of reform and its poor majority is so extreme that China has dozens of billionaires while average income for the rest of its 1.3 billion people is among the world’s lowest. Beijing has launched two manned space missions and is talking about exporting high-speed trains to California and Europe while families in remote areas live in cave houses cut into hillsides.

Japan‘s people still are among the world’s richest, with a per capita income of $37,800 last year, compared with China‘s $3,600. So are Americans at $42,240, their economy still by far the biggest. But Japan is trapped in a two-decade-old economic slump, the U.S. is wrestling with a financial crisis, and China‘s sheer economic size and the lure of its vast consumer market adds to its clout abroad.

Its explosive growth has driven conflicting shifts in Asia and beyond, triggering a scramble for commercial opportunity but fueling unease that the wealth is helping to finance a military buildup to press the communist government’s claims in the region.

“I think everyone in the region is trying to benefit from Chinese economic dynamism but at the same time is trying to make sure China does not become a regional hegemon,” said Greg Sheridan, foreign editor of The Australian newspaper.

To read more, visit: http://www.washingtontimes.com/news/2010/jul/31/china-sets-milestone-economy-passes-japans/

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