China set to become world's 2nd largest economy

The Chinese economy grew by stunning 10.7 per cent in the fourth quarter of 2009, which may see it replacing Japan as the second largest economy in the world.

Bolstered by massive stimulus measures and improving domestic output, China clocked an economic growth rate of 8.7 per cent in 2009, even as many developed nations are still grappling with recession blues.

The National Bureau of Statistics of China on Thursday said the national economy grew 10.7 per cent in the December quarter, much higher than 2009 third quarter expansion of 9.1 per cent.

"The gross domestic product (GDP) for the year 2009 was 33,535.3 billion yuan (about $4.91 trillion), up by 8.7 per cent at comparable prices...," National Bureau of Statistics' Commissioner Ma Jiantang said in a statement.

Bogged down by the financial meltdown, Japan has seen sluggish growth in recent quarters.
World Bank has projected that the Japanese economy would shrink 5.4 per cent in 2009, which implies that its GDP would come down to $4.66 trillion.

According to World Bank, China's GDP was $4.33 trillion in 2008 while that of Japan was $4.91 trillion.

"In terms of growth by quarters, it was up 6.2 per cent for the first quarter, 7.9 per cent growth for the second quarter, 9.1 per cent for the third quarter and 10.7 per cent for the last quarter (of 2009)," the statement noted.

China, one of the fastest growing economies, had resorted to proactive fiscal policy and relatively eased monetary steps to keep the growth momentum.

However, the latest economic figures have also raised concerns that China may tighten the money supply in the coming months to avert the economy from overheating.

Earlier this month, the Chinese central bank raised the cash reserve requirements of its banks by 50 basis points.

The World Bank has forecast global economy to expand 2.7 per cent 2010 while it expects Chinese GDP to grow as much as nine per cent this year. Recently, the International Monetary Fund said that world economy is recovering than expected and is anticipated to climb over three per cent in 2010.