The Future of China as an Economic Power and Japan

In the wake of China overtaking Japan to become the second largest economy ion the world, Satoshi Amako evaluates the likely course of China's foreign policy.



In January, the National Bureau of Statistics of China announced that China’s GDP for 2010 had increased by 10.3% year on year. The U.S. dollar value of the GDP was approximately 5878.6 billion dollars. On the other hand, the Cabinet Office of Japan announced on February 14th that Japan’s GDP for the same year was about 5474.2 billion dollars, which means that China has finally become the second largest economy in the world. What is more, the world-famous economist Hu Angang, a Professor at Tsinghua University, wrote an article entitled “How Should China Catch Up with and Overtake the United States?” in the first volume of Outlook Weekly in 2011, in which he presents a strong expectation that China will surpass the U.S. in terms of GDP by 2020.

Apparently, China is strengthening its presence as the factory of the world as foreign direct investment toward China is kept at a high level and distribution infrastructure—such as high-speed railways, highways, and air transportation—is rapidly improved especially in the inland region, whereas various problems have recently been identified, including widening disparity and serious environmental issues. Furthermore, China has also steadily achieved sufficient performance as the market of the world, unlike developed economies that have been stagnant since the world financial crisis triggered by the Lehman Shock in the summer of 2008. Having reigned over the world as the superpower, the United States is now facing a sluggish economy and is forced to seek correction of the trade imbalance with China through revaluation of the renminbi and improvement of the huge trade deficit. When Hu Jintao visited the U.S. in January 2011, they could not condemn human rights issues and military expansion of China very strongly, with large business proposals amounting to nearly 4 trillion yen dangled under their noses. This fact illustrates China’s influence today.

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