China officially overtakes Japan as No. 2 economy


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China officially surpassed Japan as the world's second biggest economy, according to government reports; Japan's economy contracted slightly in the fourth quarter compared to the previous three months, while China's economy surged.

GDP in Japan decreased 0.3 percent in Q4 as generous government subsidies on environmentally friendly cars came to an end and spurred a drop in consume spending; Japan's economy shrank at an annualized rate of 1.1 percent for the October-December period from the prior three months.

The Japanese Cabinet Office said the contraction brought the total value of the nation's economic production for 2010 to $5.47 trillion - slightly less than the $5.88 trillion economy China logged for 2010. Five year ago, China's economy stood at only $2.3 trillion, and the latest figures are a testament to the country's rapid ascendancy into an economic superpower.

Analysts project China will continue to grow at a quick pace, with many forecasting it will take over the U.S. as the world's largest economy within the next 20 years. Japan, on the other hand, has a fast-aging population and has battled deflation and economic stagnation for much of the last two decades.

Nonetheless, Japan's economy grew at a 3.9 percent pace over all of 2010, a sign the country may have emerged from the recession that hurt growth through much of 2008 and 2009.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Business , Economy
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