China overtakes Japan to be second biggest economy

China has overtaken Japan to become the world's second-largest economy – and it will relieve the United States of the top spot by 2027.

According to figures from the Japanese Cabinet Office, the country's second quarter GDP was $1.28 trillion – less than China's $1.337 trillion. However, taken as a whole, Japan was still the bigger economy over the first six months of 2010.

According to Goldman Sachs chief economist Jim O'Neill, China will overtake the US, whose annual GDP is $14 trillion, by 2027.

If you're getting a sense of deja-vu, it's because we've been here before. China overhauled Japan's GDP in the final quarter of 2009, only to fall back behind its rival in the first quarter of 2010. Quarterly GDP comparisons between these two countries are tricky because they do not take account of seasonal differences.

But with China's growth rate surging 10.3 percent in the second quarter of 2010 compared to a year earlier and Japan expanding 2 percent, the future belongs to the emerging superpower.

Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd, said: "It is not likely that Japan will retake the number two spot given the likely growth rates."

Read a full report at Bloomberg. ·