China surpasses Japan as No.2 economy

China has passed Japan to become the world's second-largest economy behind the US. The Japanese economy was valued at about US$1.28 trillion in the April to June quarter, slightly below China's figure of US$1.33 trillion. The GDP of the US was roughly US$14 trillion in 2009. GDP expanded at an annualized pace of 0.4% in the three months ended June 30, slowing from a revised 4.4% expansion in the first quarter, the Cabinet Office said in Tokyo. The median estimate of economists was for annual growth of 2.3%.




Consumer spending, which accounts for almost 60% of GDP, was flat in the latest quarter, compared with revised growth of 0.5% in the previous quarter. The slowdown indicates that incentives to buy energy- efficient cars and electronics are losing their edge. Net exports, or shipments minus imports, added 0.3% to growth last quarter, slowing from a revised 0.6% in the first three months of 2010. Business spending gained 0.5% in the second quarter, compared with 0.6% in the first three months.

Without adjusting for price changes, Japan's economy shrank a nominal 0.9% in the April-June period from the previous quarter, the first contraction in three quarters, report showed. Price declines showed signs of easing, with the GDP deflator falling 1.8% in the second quarter from a year earlier, narrowing from a 2.8% drop in the previous quarter.