Japan lost its place as the world’s No. 2 economy to China in the second quarter, as receding global growth sapped momentum and stunted a shaky recovery.
GDP grew at an annualized rate of just 0.4 percent, the government said yesterday, far below the annualized 4.4 percent expansion in the first quarter, adding to evidence the global recovery is facing strong headwinds.
The figures underscore China’s emergence as an economic power that is changing everything from the global balance of military and financial power to how cars are designed. It is already the biggest exporter, auto buyer and steel producer, and its global influence is expanding.
China has been a major force behind the world’s emergence from deep recession, delivering much-needed juice to the US, Japan and Europe. Tokyo’s latest numbers, however, suggest that Chinese demand alone may not be enough for Japan or other economic giants.
“Japan is the canary in the gold mine because it depends very much on demand in Asia and China, and this demand is cooling quite a bit,” said Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo. “This is a warning sign for all major economies that just focusing on overseas demand won’t be sufficient.”
China has surpassed Japan in quarterly GDP figures before, but this time it’s unlikely to relinquish the lead.
China’s economy will almost certainly be bigger than Japan’s at the end of this year because of the huge difference in each country’s growth rates. China is growing at about 10 percent a year, while Japan’s economy is forecast to grow between 2 percent and 3 percent this year. The gap between the size of the two economies at the end of last year was already narrow.
Japan’s nominal GDP, which is not adjusted for price and seasonal variations, was US$1.286 trillion in the April-to-June quarter, compared with US$1.335 trillion for China.
Japan has held the No. 2 spot after the US since 1968, when it overtook West Germany. From the ashes of World War II, the country rose to become a global manufacturing and financial powerhouse, but its so-called “economic miracle” turned into a massive real estate bubble in the 1980s, before imploding in 1991. What followed was a decade of stagnant growth and economic malaise from which the country never really recovered.
Japanese Prime Minister Naoto Kan now faces a long list of daunting problems — a rapidly aging and shrinking population, persistently weak domestic demand, deflation, a strong yen and slowing growth in key export markets.
In contrast, China’s growth has been spectacular, its voracious appetite fueling demand for resources, machinery and products from the developing world, as well as rich economies such as Japan and Australia. China is Japan’s top trading partner.
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.
Japan’s people are among the world’s richest, with a per capita income of US$37,800 last year, compared with China’s US$3,600. So are Americans at US$42,240, their economy still by far the biggest.
“We should be concerned about per capita GDP,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo.
China overtaking Japan “is just symbolic,” he said. “It’s nothing more than that.”
LONG FLIGHT: The jets would be flown by US pilots, with Taiwanese copilots in the two-seat F-16D variant to help familiarize them with the aircraft, the source said The US is expected to fly 10 Lockheed Martin F-16C/D Block 70/72 jets to Taiwan over the coming months to fulfill a long-awaited order of 66 aircraft, a defense official said yesterday. Word that the first batch of the jets would be delivered soon was welcome news to Taiwan, which has become concerned about delays in the delivery of US arms amid rising military tensions with China. Speaking on condition of anonymity, the official said the initial tranche of the nation’s F-16s are rolling off assembly lines in the US and would be flown under their own power to Taiwan by way
OBJECTS AT SEA: Satellites with synthetic-aperture radar could aid in the detection of small Chinese boats attempting to illegally enter Taiwan, the space agency head said Taiwan aims to send the nation’s first low Earth orbit (LEO) satellite into space in 2027, while the first Formosat-8 and Formosat-9 spacecraft are to be launched in October and 2028 respectively, the National Science and Technology Council said yesterday. The council laid out its space development plan in a report reviewed by members of the legislature’s Education and Culture Committee. Six LEO satellites would be produced in the initial phase, with the first one, the B5G-1A, scheduled to be launched in 2027, the council said in the report. Regarding the second satellite, the B5G-1B, the government plans to work with private contractors
‘OF COURSE A COUNTRY’: The president outlined that Taiwan has all the necessary features of a nation, including citizens, land, government and sovereignty President William Lai (賴清德) discussed the meaning of “nation” during a speech in New Taipei City last night, emphasizing that Taiwan is a country as he condemned China’s misinterpretation of UN Resolution 2758. The speech was the first in a series of 10 that Lai is scheduled to give across Taiwan. It is the responsibility of Taiwanese citizens to stand united to defend their national sovereignty, democracy, liberty, way of life and the future of the next generation, Lai said. This is the most important legacy the people of this era could pass on to future generations, he said. Lai went on to discuss
MISSION: The Indo-Pacific region is ‘the priority theater,’ where the task of deterrence extends across the entire region, including Taiwan, the US Pacific Fleet commander said The US Navy’s “mission of deterrence” in the Indo-Pacific theater applies to Taiwan, Pacific Fleet Commander Admiral Stephen Koehler told the South China Sea Conference on Tuesday. The conference, organized by the Center for Strategic and International Studies (CSIS), is an international platform for senior officials and experts from countries with security interests in the region. “The Pacific Fleet’s mission is to deter aggression across the Western Pacific, together with our allies and partners, and to prevail in combat if necessary, Koehler said in the event’s keynote speech. “That mission of deterrence applies regionwide — including the South China Sea and Taiwan,” he
RSS