Published October 2nd, 2009 by Future Atlas
China Moves Up the Rankings, Japan Down
China is about to become the world’s second-largest economy, supplanting Japan, the New York Times reports.
This “will bring an end to a global economic order that has prevailed for 40 years, with ramifications across arenas from trade and diplomacy to, potentially, military power,” the Times notes.
China is already the second-largest economy measured by purchasing power, of course. But as early as next year it could achieve this status at exchange rates as well, a crucial turning point, as it is a better measure of global economic clout.
China is projected to overtake the US in total purchasing power before 2020, the Times says. Then comes the big moment:
Based on current growth and currency trends, Mr. Kwan forecasts that the Chinese economy could surpass that of the United States in 2039. And that date could move up to 2026 if China lets its currency appreciate by a mere 2 percent a year.
Meanwhile, Japan is not faring as well:
China’s rise could accelerate Japan’s economic decline as it captures Japanese export markets, and as Japan’s crushing national debt increases and its aging population grows less and less productive — producing a downward spiral. “It’s beyond my imagination how far Japan will fall in the world economy in 10, 20 years,” said Hideo Kumano, economist at the Dai-Ichi Life Research Institute.
Japan is already fraying, by some standards:
Many here ask whether Japan is destined to be the next Switzerland: rich and comfortable, but of little global import, largely ignored by the rest of the world… The per-capita gross domestic product of Japan … stalled at $34,300 in 2007; it is now a quarter below American levels and 19th in the world. Both income inequality and poverty are on the rise.
No Japanese companies are now in the top 10 firms by market capitalization, and Japan’s largest, Toyota, is 22nd. Only 5 other Japanese companies are in the top 100.
Japan’s self-regard has taken a hit; a new poll finds Japanese to be the least proud of their country among 33 nations surveyed.
(Japanese self-image: tip from @Urbanverse)
(Image of Shanghai courtesy alexkost, Flickr)