Japan to lose 2nd's largest economy ranking to China in 2010, China to overtake USA in 2020

China to overtake USA in 10 years.

China’s economy is now a fourth the size of the $14 trillion U.S. economy, but given plausible growth rates in both countries, China’s output will exceed America’s in the 2020’s. China will overtake the U.S. in terms of economic output within a decade, according to estimates released by Deutsche Bank, which said it had to accelerate its forecast of the mainland’s leadership in the global economy in view of favorable growth dynamics in emerging markets. China’s growth will be underpinned by a rapid expansion in emerging market economies, which will account for about 70% of global GDP growth in the coming decade.

China will “massively invest” in these emerging economies using its nearly $2 trillion in foreign exchange reserves, extend its leverage by extending loans to the International Monetary Fund, and allow the yuan to appreciate in preparation for the currency’s potential reserve status.
China’s nominal GDP growth could surpass that of the United States within ten years, a period which will likely be accompanied by a gradual appreciation of the yuan.

China to overtake Japan in 2010

Around 2010 or sooner 2009, Japan will only be the 3rd world’s largest economy, behind the United States and China. 41 years ago, the Japanese industry set itself behind the USA.

The International Monetary Fund predicted it. The Minister of Economy, Commerce and industry of Japan confirms that Japan will soon lose its place of 2nd World’s Largest economy, a rank that it occupied since 1968 !

“The statutes of second biggest econmy is touching to its end”, indicated the minister. In terms of internal PIB, China will overtake Japan in 2010, perhaps even the end of this year, if the Japanese economy degrades at the same rhytm as now. In the second Trimester of 2009, the Japanese PID contracted to 14.2%. The IMF predicted a recession rate of 6.2% for the year, against 6.5% for China.

If the minister recongnize that the temptation of protectionism in increasing, he warned that it could be dangerous. He is well aware of the lessons of the past, that protectionism slowed down international commerce, and led to the world’s recession, followed by the world war II.
According to the ministry of economy, commerce and industry, Japan must find solution to stay competive, making references to Japan’s lead in technology that has longtime helped it’s economy stay afloat.

Japan’s economy in decline

Japan is still suffering from an economic crisis that hit the country in 1989-90, when the “bubble economy” of high land prices and high stock market prices collapsed.
Both banks and businesses had much of their assets in either land or in cross-shareholdings with companies to which they were allied.
Suddenly, these assets – and therefore the debts on which they were secured – were wiped out.
As a result, banks became burdened with bad debts and lending to companies for expansion dried up.
Gradually, companies which produced in Japan have shifted some of their factories abroad, increasing unemployment.
And as unemployment rose to record levels, people have stopped spending so freely, causing prices to drop.
This makes everyone more reluctant to spend in the hope that they might get even greater bargains in the future.

Japan has been seriously affected by the world economic slowdown.
In the past, exports by its large and successful companies have helped sustain its economy, but with the US economy wobbling, this is much more difficult.
The day of reckoning for the banking sector is getting closer, with banks being forced finally to declare their non-performing assets.
In addition, Japan is suffering from a large debt overhang from its excessive government borrowing, which will have to be reduced to lower long-term interest rates.