China overtakes Japan as world’s 2nd largest economy

It’s official: After more than four decades, Japan is no longer No. 2.

China surpassed Japan in 2010 to become the second-largest economy in the world, according to financial reports.

Japan had held the No. 2 spot (after the U.S.) for 43 years, but on February 14, the Japanese government announced that its Gross Domestic Product (GDP) for 2010 had slipped to $5.47 trillion – a decline of 1.1 per cent in the fourth quarter last year. China reported in January that its GDP grew to $5.88 trillion last year.

The data showed Japan’s economy was the weakest among major rich nations, compared with annualised growth of 3.2 per cent in the U.S. in the same quarter. European data due out shortly is expected by financial experts to show slight growth in the 17-nation euro zone.

The new ranking marked the latest step in China’s rise to the economic top. In 2005, the country outstripped Britain to rank 4th in the world in terms of GDP; two year later, Germany ceded the title of the world’s third-largest economy to China. And China might not stay second for long, either: Japan’s government also predicted China will pass the U.S. as the world’s largest economy before 2030 at the rate its economy is growing. The U.S. GDP for 2010 is estimated at $14.7 trillion.