Japan loses No. 2 economy spot to China

TOKYO: Japan's gross domestic product fell an annualised 1.1 per cent in the fourth quarter in 2010, marking the first decline in five quarters due to a drop in exports, diminishing government stimulus programmes and weak consumer consumption, said the Cabinet Office in a preliminary report on Monday.

According to the data, Japan has now relinquished its position as the world's second largest economy to China.

Japan's nominal GDP, before adjustments for prices, totalled $5.47 trillion in 2010, lower than China's figure of nearly $5.8 trillion. Japan has held the title of world's second largest economy for 42 years.

“We are not engaging in economic activities to vie for ranking but to enhance people's lives. From that point of view we welcome China's economic advancement as a neighbouring country,” said Chief Cabinet Secretary Yukio Edano at a press briefing on Monday.

“The important thing is to incorporate such vitality of China to seek growth in the Japanese economy,” Mr. Edano added.

Japan's Economic and Fiscal Policy Minister Kaoru Yosano said Japan wanted to deepen its “friendly and favourable” economic ties with China.

Economists said slowing demand from emerging economies, particularly in Asia, coupled with a strong yen, which reached a 15-year high against the U.S. dollar during the period, weighed heavily on Japanese exports.

Analysts and government officials have predicted, however, that Japan will continue on a growth path in the January-March quarter as an upturn in the U.S. economy and demand for Japanese goods from the U.S. and its Asian neighbours had shown signs of increasing.

Many analysts such as those at the World Bank and Goldman Sachs have been quoted as saying that in their opinion China may overtake the United States as the number one economy by 2025. — Xinhua