China displaces Germany as world’s third largest economy
14 Jan 2009
China issued revised data for 2007 on Wednesday that showed its economy has surpassed Germany to become the world's third largest behind the US and Japan. The revision was related to strong growth in the industrial sector and service sectors, which expanded 14.7 per cent and 13.8 per cent respectively.
The Chinese economy expanded a revised 13 per cent in 2007 from a year earlier, up from an original estimate of 11.9 per cent, the National Bureau of Statistics said in a statement on its website.
The higher growth data contributed 777.6 billion yuan ($113.8 billion) to the size of China's economy at the end of 2007, lifting the overall value of goods and services produced to 25.731 trillion yuan ($3.766 trillion).
According to calculations by Merrill Lynch, Germany's GDP was $3.54 trillion in 2007, using end-of-year exchange rates. The US ranked as the world's largest economy in 2007 with a GDP of $13.808 trillion followed by Japan at $4.38 trillion.
China's economy is 70 times bigger than when leader Deng Xiaoping ditched hard-line Communist policies in favor of free-market reforms in 1978. After overtaking the UK and France in 2005, China became the third nation to complete a spacewalk, hosted the Olympic Games and surpassed Japan as the biggest buyer of US Treasuries.
China is the biggest contributor to global growth and underpins demand for metals, grains and the exports of its Asian neighbors. It also has a big stake in the US economy, holding $652.9 billion of US Treasuries, according to Treasury Department data.
German economic growth slumped last year, according to numbers released by the Federal Statistics Office in Frankfurt. Gross domestic product grew 1.3 per cent, down from 2.5 per cent in 2007. The immediate future also does not hold much promise for Europe's largest economy. (See: Zero growth for Germany in 2009, says economic panel)
Since introducing free-market policies, China has lifted 300 million citizens out of poverty, according to the United Nations. Before the latest revisions, the nation's per-capita gross national income was 132nd in the world at $2,360, behind Angola at 125th and Azerbaijan at 126th and ahead of Tonga at 133rd, according to the World Bank.
The revision comes at a time when Beijing is struggling to reverse a sharp slowdown in growth caused by global economic turmoil. The government is launching a 4 trillion yuan ($586 billion) stimulus package and has promised measures to help struggling exporters and producers of autos and steel. (See: China pumps $586 billion to bolster economy)
China routinely revises past economic data as it gathers new information on the fast-changing economy, and already had raised 2007 growth once last year, from 11.3 per cent to 11.9 per cent. The statistics bureau's two-sentence statement Wednesday did not explain the factors behind the latest change.
Independent economists say China's economy is believed to have grown by another 9 per cent in 2008 despite the global downturn. But they have slashed 2009 forecasts to as low as 6 per cent. That would be the highest for any major economy but is worrisome for communist leaders who need to satisfy a public that expects steadily rising incomes.
