China now third-largest economy

China now third-largest economy
Nipa Piboontanasawat and Kevin Hamlin


Bloomberg
BEIJING — China’s economy overtook Germany’s in 2007 to become the world’s third-largest, underscoring the country’s increasing economic and political clout.

Gross domestic product (GDP) increased 13% from 2006 to 25731-trillion yuan ($3,38-trillion), Germany’s statistics bureau said on its website yesterday. That topped Germany’s € 2,424-trillion ($3,32-trillion), using average exchange rates for 2007.
China’s economy is 70 times bigger than when leader Deng Xiaoping ditched hard-line communist policies for free-market reforms in 1978. After overtaking the UK and France in 2005, China became the third nation to achieve a space walk, hosted the Olympic Games and surpassed Japan as the biggest buyer of US treasuries.
“This number is just one more piece of evidence that China is one of the most important players on the global stage,” said Huang Yiping, chief Asia economist at Citigroup in Hong Kong.
The figure was released as China has its weakest economic expansion since 1990 after exports collapsed on global recession.
German economic growth slumped last year, according to numbers released by the Federal Statistics Office in Frankfurt yesterday.
Louis Kuijs, a senior economist at the World Bank in Beijing, said China’s economy might now be up to 15% larger than Germany’s. He confirmed the calculation that China overtook Germany in 2007.
The US economy is the world’s biggest, followed by Japan’s.
“If China continues to grow at its average rate in the past 20 years and if the US does the same, it will overtake the US in 20 years,” said Tim Condon, head of Asia research at ING Groep in Singapore. “There’s no doubt that will happen. It’s just a matter of time.”
China’s enlarged role in the global financial system was highlighted when it cut rates at the same time as the US Federal Reserve and five other central banks in October to counter the deepening credit crisis. In contrast, Japan stood on the sidelines.
China is the biggest contributor to global growth, underpinning demand for metals, grains and exports of its Asian neighbours. It has a big stake in the US economy, holding $652,9bn in US treasuries, according to US data.
Since introducing free-market policies, the Chinese government has lifted 300-million citizens out of poverty, according to the United Nations. Before the latest revisions, the country’s per-capita gross national income was 132nd in the world at $2360, behind Angola at 125th and Azerbaijan at 126th and ahead of Tonga at 133rd, according to the World Bank.
“China’s GDP tells us something about how quickly it is getting richer compared with other countries, but in terms of per-capita GDP it is still less than 10% as rich as Germany is,” said Kuijs.