Chinese dragon blows cold breath on Japan

14th February 2011

China was acknowledged last year as having surpassed Japan as an economic powerhouse, second only to the United States, but full-year Japanese data confirming it were not available until today.

The fortune of the two economies could not be more different the Telegraph goes on to report  China is growing rapidly and driving the global economy, while Japan has had trouble shaking off the stagnation that has dogged it since its property bubble burst.

It's not all bad news for Japan, which actually stands to gain from its western neighbour's prosperity.

Virginie Maisonneuve, head of Global and international equities at Schroders Investment Management says:

"While it is hard to see how Japan's demographic weakness could be reversed, the key for economic success can be found in part in how productive its assets are and how successful it can harness its rapidly maturing and economically successful neighbour:

"China's inward push – its effort to further develop its domestic demand and lower its reliance on exports – could be beneficial to Japan.

"China has overtaken the US as Japan's largest trading partner and the key to compensating for the Japan's weak domestic trend is in the country's own hands."

According to the Guardian, China could eclipse the United States as the world's largest economy sometime between 2020 and 2030.

It was after all only four years ago that China, surpassed Germany to become the world's third largest economy.

But China's rapid economic expansion and whether it will benefit the country as a whole is questioned on the BBC News website.

It says: "China lags behind its Asian neighbour in so many measures that matter to the people that live here.

China's huge population means the average wealth per head is a fraction of that in Japan.

Living standards are considerably lower in much of the country, particularly in rural areas."

China's new status is causing a difference of opinion in the Wall Street Journal:

HARRISON SHINER wrote: "China is on the rise and will be on the rise for many, many years to come. Even though the U.S. is far ahead of China as of now, China's economy will keep growing and growing and eventually pass the U.S. It's a 100% fact that this will happen. And even though China is a poor country, it is still large enough to have the biggest economy in the world."

However Charles Hoffman disagrees: "or not

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